Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Equity Bottom-Up

We are initiating coverage of Rakuten with narrow moat and stable moat trend ratings, given its network effect, supported by its comprehensive ecosystem in Japan of combining e-commerce and financial technology, or FinTech. We believe the worst is over and Rakuten’s domestic e-commerce business will bottom out this year with a stabilized operating margin in the second half, and we expect the losses from unprofitable overseas business to decrease.However, we think the company’s 2020 target for its domestic e-commerce is overly optimistic, and we project the organic growth for gross merchandise volume, or GMV, for domestic e-commerce will be 10.7% per year in the next five years, versus about 14% average annual growth in Rakuten’s 2020 Vision. Our fair value estimate for Rakuten is JPY 1,370 per share, which implies forward fiscal 2017 price/earnings of 26.6 times, and our bull-case and bear-case scenarios lead to a high uncertainty rating.Analysts: Marie Sun &amp; Mari Kumagai

We are initiating coverage of Rakuten with narrow moat and stable moat trend ratings, given its network effect, supported by its comprehensive ecosystem in Japan of combining e-commerce and financial technology, or FinTech. We believe the worst is over and Rakuten’s domestic e-commerce business will bottom out this year with a stabilized operating margin in the second half, and we expect the losses from unprofitable overseas business to decrease.However, we think the company’s 2020 target for its domestic e-commerce is overly optimistic, and we project the organic growth for gross merchandise volume, or GMV, for domestic e-commerce will be 10.7% per year in the next five years, versus about 14% average annual growth in Rakuten’s 2020 Vision. Our fair value estimate for Rakuten is JPY 1,370 per share, which implies forward fiscal 2017 price/earnings of 26.6 times, and our bull-case and bear-case scenarios lead to a high uncertainty rating.Analysts: Marie Sun &amp; Mari Kumagai

Initiating Coverage of Rakuten With Narrow Moat, StableTrend, and FVE of JPY 1,370