Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Securities analyst covering electronics, precision equipment & robotics, engineering, construction, transport and other sectors for more than 25 years in Japan and 3 years in Korea. Permanent resident of Japan.

Senior Technology Analyst, Japanese Equities

Nihon M&A Center: Kishida’s New Initiatives Towards SMEs to Accelerate Growth

BayCurrent: Strong Earnings and an Upgrade to Guidance; Drop in Multiples Offers a Good Entry Point

Shift: Strong Earnings Momentum to Continue with Expanding Software Testing into Metaverse Market

Nihon M&A Center: Superior Quality But Hefty Valuation

Nihon M&A Center: Our Takeaways From The Q2 Results

A Deeper Look into Japan's SME M&A Advisory Boutiques

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

The shares are down 28% from their 52-week high, but still selling at 75x management's EPS guidance for FY Mar-22. Is it time to buy into the decline? Over the past month, the shares have rebounded by 8%.Nihon M&amp;A Center is more expensive than listed competitors M&amp;A Capital Partners and Strike, but much larger in terms of sales and many times larger in terms of market cap. If you want a liquid play on M&amp;A, this is it.Annual revenue growth has remained above 12% through the COVID-19 pandemic and margins have remained stable. The number of new M&amp;A mandates increased by 15.5% in FY Mar-21 to a level 24% greater than the number of transactions completed.Management's guidance is usually conservative and looks to be so again this year. On a 3-year view, we expect revenues and profits to rise by about 40%. On a 6-year view, they could double.All in all, we think the M&amp;A opportunity in Japan outweighs the risks, which include another wave of COVID infections and macro-economic difficulties.

The shares are down 28% from their 52-week high, but still selling at 75x management's EPS guidance for FY Mar-22. Is it time to buy into the decline? Over the past month, the shares have rebounded by 8%.Nihon M&amp;A Center is more expensive than listed competitors M&amp;A Capital Partners and Strike, but much larger in terms of sales and many times larger in terms of market cap. If you want a liquid play on M&amp;A, this is it.Annual revenue growth has remained above 12% through the COVID-19 pandemic and margins have remained stable. The number of new M&amp;A mandates increased by 15.5% in FY Mar-21 to a level 24% greater than the number of transactions completed.Management's guidance is usually conservative and looks to be so again this year. On a 3-year view, we expect revenues and profits to rise by about 40%. On a 6-year view, they could double.All in all, we think the M&amp;A opportunity in Japan outweighs the risks, which include another wave of COVID infections and macro-economic difficulties.

Nihon M&A (2127 JP): The Most Liquid Way to Play Japan's Structural M&A Opportunity