In today’s briefing:
- TSI Holdings (3608) – New Year, New Buyback, Still Good, Still Cheap
- Fast Retailing: Growth Markets Look Weak & Uniqlo Japan Profitability Affected By Rising Wages
- Money Forward: Top Line Expands, Yet to See Meaningful Turnaround in Profitability
- Is NISSOL (2327) Still a Card to Be Sold for Cash Generation?
- Amvis Holdings Inc (7071 JP): Scale Expansion to Drive Revenue Growth; Formulated New 3-Year Plan
TSI Holdings (3608) – New Year, New Buyback, Still Good, Still Cheap
- Last April I wrote about Tsi Holdings (3608 JP) which was trading at 0.5x EV/EBITDA and where I suggested it could double in 2-3yrs.
- The day after I wrote, the stock closed at ¥312/share, briefly touched ¥480 before ending the year at ¥444. On Friday they announced Q3 earnings, now TTM EV/EBITDA is 2.5x.
- They also announced a buyback, and the stock is up further. It is worth looking into the details both near-term and what they mean longer-term.
Fast Retailing: Growth Markets Look Weak & Uniqlo Japan Profitability Affected By Rising Wages
- Fast Retailing (9983 JP)’s 1QFY23 results were below consensus estimates with OP missing consensus by 13.2%.
- The outlook for the rest of the year doesn’t seem too well either with Domestic profitability held back by rising wages and growth markets affected by slowing demand for apparel.
- Even though China could emerge from COVID to boost Uniqlo’s profits, we see significant downside risk to Fast Retailing’s FY23 guidance.
Money Forward: Top Line Expands, Yet to See Meaningful Turnaround in Profitability
- Money Forward (3994 JP) reported 4QFY11/2022 results yesterday. Revenue increased 42.5% YoY to JPY6.2bn (vs consensus JPY6.0bn) driven by growth in both MF Business and MF Home.
- Operating losses for the quarter widened to JPY2.2bn (34.8% of revenue) from JPY661m (15.2% of revenue) in the same quarter last year (vs consensus JPY2.0bn).
- Though MF’s top line continues to grow, we have not yet seen a meaningful improvement in its profitability, and we think, MF’s shares are overvalued compared to its counterpart freee.
Is NISSOL (2327) Still a Card to Be Sold for Cash Generation?
- With the shrinking domestic market, the steel brokerage business is no longer a profitable business for trading companies, so Nippon Steel needs to strengthen its own sales capabilities.
- While this TOB will have negative impact on Nippon Steel’s balance sheet and profit margins in the short term, the steel market may be moving more significantly than we think.
- While it would be better for Nippon Steel to make NISSOL 100% subsidiary, I suspect that NISSOL is still being kept as a card to be sold for cash generation.
Amvis Holdings Inc (7071 JP): Scale Expansion to Drive Revenue Growth; Formulated New 3-Year Plan
- Amvis Holdings Inc (7071 JP) recorded 51% YoY revenue growth to ¥22B in FY22, 3% ahead of guidance. The company has added 16 facilities (825 beds), exceeding its initial plan.
- Buoyed by strong FY22 results, business expansion, and favorable demand scenario, Amvis has raised FY23 guidance. In FY23, the company aims to open 19 new facilities.
- Amvis has formulated the new three-year plan, “Amvis 2025”. The company is accelerating the pace of opening Ishinkan to bring up the number to 127 by September 30, 2025.
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