Equity Analyst, LightStream Research

Supun Walpola

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/25919" target="_blank" data-smartkarma-citation="entities:25919:1">Money Forward Inc </a>(MF) is the first fintech company in Japan to go public. The Japanese fintech market is expected to grow at a CAGR of c.60% till 2021E. The personal financial management (PFM) and corporate accounting segments, where MF has established a stronghold, is expected to reach JPY36bn by 2021E at a CAGR c.45%.We expect MF’s revenue to reach JPY8,075m by FY11/20E at a CAGR of 40.8% (FY11/17-20E) driven by strong medium-term growth in the PFM Services and MF Cloud Services segments. Despite its solid medium term prospects, MF's valuation looks stretched to us. MF needs to achieve an OP margin of above 60% even to get to a FY3 EV/OP multiple of 20x.

Money Forward Inc (MF) is the first fintech company in Japan to go public. The Japanese fintech market is expected to grow at a CAGR of c.60% till 2021E. The personal financial management (PFM) and corporate accounting segments, where MF has established a stronghold, is expected to reach JPY36bn by 2021E at a CAGR c.45%.We expect MF’s revenue to reach JPY8,075m by FY11/20E at a CAGR of 40.8% (FY11/17-20E) driven by strong medium-term growth in the PFM Services and MF Cloud Services segments. Despite its solid medium term prospects, MF's valuation looks stretched to us. MF needs to achieve an OP margin of above 60% even to get to a FY3 EV/OP multiple of 20x. 

Money Forward (3994 JP): Solid Mid-Term Prospects for the Fintech Pro, but Overvalued