'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

Former Japan Equity PM with over 30 of experience now providing database-driven analysis of the market, sectors, peer groups and stocks for LightStream Research.

Leveraging data and graphic analysis provided by Japan Analytics, and the related Japan Analytics iPad App, we provide insights on companies are often ignored by the sell-side as well as challenging conventional wisdom on the market overall.

'Quantamental' Japan Specialist

🇯🇵 Japan • Internet Sector Review - 'Japan Passing'

GMO Payment Gateway: As Expensive as It Is, This Is Not a Short

🇯🇵 Japan • Spring Results & Revisions & Market Update - Slip-Slidin' Away

GMO Internet (9447 JP) - Grossly or Modestly Overrated?

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Equity Bottom-Up

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/078/817/original/2019-02-14_15-52-58.png?1550127199" class="editor-image img-responsive" data-smartkarma-image-id="78817"></figure><div class="content-caption">Source: Japan Analytics</div><a href="https://www.smartkarma.com/entities/13631" target="_blank" data-smartkarma-citation="entities:13631:1">GMO internet (9449 JP)</a> released 2018 full-year results in 12th February. 2018 was a turbulent year for the company as it 'surfed' the cryptocurrency wave. The subsequent downfall was swift and brutal. However, the company deserves some plaudits for cutting its (substantial) losses and attempting to move on (albeit somewhat half-heartedly). Unfortunately, GMO-i has 'form' in writing off large losses as shown above.  The positive consequence of this saga is a renewed commitment to return value to shareholders with a stated aim of returning 50% of profits. Two-third of that goal is to be met by quarterly dividends, with the balance allocated to share repurchases in the following year.  Having royally 'screwed up' with 'cryptocurrencies', and trying the patience of remaining shareholders yet again, this policy is to be commended, particularly if more attention is paid to generating the wherewithal to meet the 50% without raiding the listed subsidiaries' 'piggy bank'.  Apart from the excitement that this move has generated and the year-long support this buying programme will provide to the share price, our two valuation models, find little in the way of further upside potential. We remain sceptical of investing in GMO-i over the long-term and prefer <a href="https://www.smartkarma.com/entities/1492" target="_blank" data-smartkarma-citation="entities:1492:1">GMO Payment Gateway (3769 JP)</a> - the best business in the GMO-i 'stable' - but consider GMO-PG's stock overvalued at 57x EV/OP.

Source: Japan AnalyticsGMO internet (9449 JP) released 2018 full-year results in 12th February. 2018 was a turbulent year for the company as it 'surfed' the cryptocurrency wave. The subsequent downfall was swift and brutal. However, the company deserves some plaudits for cutting its (substantial) losses and attempting to move on (albeit somewhat half-heartedly). Unfortunately, GMO-i has 'form' in writing off large losses as shown above.  The positive consequence of this saga is a renewed commitment to return value to shareholders with a stated aim of returning 50% of profits. Two-third of that goal is to be met by quarterly dividends, with the balance allocated to share repurchases in the following year.  Having royally 'screwed up' with 'cryptocurrencies', and trying the patience of remaining shareholders yet again, this policy is to be commended, particularly if more attention is paid to generating the wherewithal to meet the 50% without raiding the listed subsidiaries' 'piggy bank'.  Apart from the excitement that this move has generated and the year-long support this buying programme will provide to the share price, our two valuation models, find little in the way of further upside potential. We remain sceptical of investing in GMO-i over the long-term and prefer GMO Payment Gateway (3769 JP) - the best business in the GMO-i 'stable' - but consider GMO-PG's stock overvalued at 57x EV/OP.

GMO.internet FY2018 Results - The Shareholder's [Re]Turn