Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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

<p>Following two extremely successful quarters, <a href="https://www.smartkarma.com/entities/base-inc" target="_blank" data-smartkarma-citation="entities:28353:1" rel="noopener">BASE Inc (4477 JP)</a> shares rallied more than 1,000% from its IPO price to reach a high of ¥16,510 per share before declining 40% to ¥9,920 after the 3Q20 results release on 16<sup>th</sup> November 2020.</p><p>In its short history, Base Inc is known for showering investors with an overwhelming amount of information, mostly immaterial and unnecessary disclosure which could distract investors from reality. The unwarranted share price rally may have started this trend, as the company did its best to stay relevant and within sight of investors all times.</p>

Following two extremely successful quarters, BASE Inc (4477 JP) shares rallied more than 1,000% from its IPO price to reach a high of ¥16,510 per share before declining 40% to ¥9,920 after the 3Q20 results release on 16th November 2020.In its short history, Base Inc is known for showering investors with an overwhelming amount of information, mostly immaterial and unnecessary disclosure which could distract investors from reality. The unwarranted share price rally may have started this trend, as the company did its best to stay relevant and within sight of investors all times.

Base Inc Bubble Is Still Far From Bursting

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><div>
<p style="text-align: left;">Wednesday's best and worst pairing is from the same corporate grouping - <a href="https://www.smartkarma.com/entities/gmo-payment-gateway-inc" target="_blank" data-smartkarma-citation="entities:1492:1" rel="noopener">GMO Payment Gateway (3769 JP)</a> and <a href="https://www.smartkarma.com/entities/gmo-internet-inc" target="_blank" data-smartkarma-citation="entities:13631:1" rel="noopener">GMO Internet (9449 JP)</a> and highlights the risks of investing in the latter to 'access' growth in the former.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/170/925/original/2020-11-12_06-02-15.png?1605128549" class="editor-image img-responsive" data-smartkarma-image-id="170925"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/170/926/original/2020-11-12_06-02-54.png?1605128586" class="editor-image img-responsive" data-smartkarma-image-id="170926"></figure></section><div style="text-align: center;"><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></div>
<hr>
<div style="text-align: center;"><p><strong>DAILY STATS</strong></p></div>
<hr>
<div style="text-align: center;"><p><strong>227 Quarterly Results</strong></p></div>
<div style="text-align: center;"><ul style="list-style-type: disc;">
<li><p style="text-align: left;"><strong>Results Score:</strong> 42% Positive / 11% Neutral / 47% Negative</p></li>
<li><p style="text-align: left;"><strong>Average Results Score Change:</strong> -1.0 points</p></li>
<li><p style="text-align: left;"><strong>Average % Change in Revenue:</strong> -7.6% Quarter YoY / -5.0% Rolling TTM YoY </p></li>
<li><p style="text-align: left;"><strong>Average Operating Profit Margin Change:</strong> -1.3 ppt</p></li>
<li><p style="text-align: left;"><strong>Percentage Making Quarterly Losses:</strong> 20%</p></li>
</ul></div>
<hr>
<div><p style="text-align: center;"><strong>107 Annual • 18 Interim Forecasts/Revisions</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 43% Positive / 9% Neutral / 48% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 50% Positive / 6% Neutral / 44% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change:</strong> -1.5 points</p></li>
</ul></div>
</div>

• BEST &amp; WORST •
Wednesday's best and worst pairing is from the same corporate grouping - GMO Payment Gateway (3769 JP) and GMO Internet (9449 JP) and highlights the risks of investing in the latter to 'access' growth in the former.
Source for all charts &amp; tables: Japan Analytics

DAILY STATS

227 Quarterly Results

Results Score: 42% Positive / 11% Neutral / 47% Negative
Average Results Score Change: -1.0 points
Average % Change in Revenue: -7.6% Quarter YoY / -5.0% Rolling TTM YoY 
Average Operating Profit Margin Change: -1.3 ppt
Percentage Making Quarterly Losses: 20%


107 Annual • 18 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 43% Positive / 9% Neutral / 48% Negative
Interim Forecast/Revision Score Change: 50% Positive / 6% Neutral / 44% Negative
Average Forecast/Revision Score Change: -1.5 points



🇯🇵 JAPAN • Results & Revisions 11/​​​​​​​​​​​​​​​​​​​​​​​​​​11 - Mitsubishi Estate, Toshiba, GMOs

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>This week in StubWorld ...</p>
</div>
<div>
<div class="content-highlight">
<a href="https://www.smartkarma.com/entities/gmo-internet-inc" target="_blank" data-smartkarma-citation="entities:13631:1" rel="noopener">GMO Internet (9449 JP)</a> is trading wide on an NAV basis, and its implied stub with respect to <a href="https://www.smartkarma.com/entities/gmo-payment-gateway-inc" target="_blank" data-smartkarma-citation="entities:1492:1" rel="noopener">GMO Payment Gateway (3769 JP)</a> is at an all-time low.</div>
</div>
<div>
<p>Preceding my comments on GMO are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
</div>
<div>
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<div class="content-remarks">
<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed as a % - of at least 20%.</p>
</div>
</div>
</div>


This week in StubWorld ...



GMO Internet (9449 JP) is trading wide on an NAV basis, and its implied stub with respect to GMO Payment Gateway (3769 JP) is at an all-time low.


Preceding my comments on GMO are the weekly setup/unwind tables for Asia-Pacific Holdcos.




These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed as a % - of at least 20%.




<p>We have been covering <a href="https://www.smartkarma.com/entities/base-inc" target="_blank" data-smartkarma-citation="entities:28353:1" rel="noopener">BASE Inc (4477 JP)</a> since its IPO in October 2019. Initially, BASE was valued in line with similar E-commerce platform multiples and the fast-growing payment processing business was ignored. However, the investor demand for COVID-resistant stocks drove the company’s valuation to unwarranted levels during the last six months.</p>
<p>In our last insight <a href="https://www.smartkarma.com/insights/base-inc-downside-risks-mount-as-ev-sales-peak" target="_blank" rel="noopener">BASE Inc: Downside Risks Mount As EV/​Sales Peak</a>, we suggested creating a short position when the share price peaked on 8<sup>th</sup> October. Since then, the share price has declined 21.5% to ¥12,500 per share.</p>
<p>On 16<sup>th</sup> October 2020, BASE Inc announced that it had invested in MOSH, a company involved in service E-Commerce.</p>

We have been covering BASE Inc (4477 JP) since its IPO in October 2019. Initially, BASE was valued in line with similar E-commerce platform multiples and the fast-growing payment processing business was ignored. However, the investor demand for COVID-resistant stocks drove the company’s valuation to unwarranted levels during the last six months.
In our last insight BASE Inc: Downside Risks Mount As EV/​Sales Peak, we suggested creating a short position when the share price peaked on 8th October. Since then, the share price has declined 21.5% to ¥12,500 per share.
On 16th October 2020, BASE Inc announced that it had invested in MOSH, a company involved in service E-Commerce.

BASE Inc Moves to Service E-Commerce Via MOSH Acquisition

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>We continue to be encouraged by market dynamics that are supportive of an ongoing equity bull market. Additionally, there continues to be an absence of breakdowns on the major global indexes (MSCI ACWI, ACWI ex-US, EM, &amp; EAFE). As a result, our outlook remains bullish.  In this report we show some love to various Sectors that have not been big attention-grabbers for us in recent months, but still have plenty of attractive stocks. The stocks highlighted hail from a variety of countries. Sectors covered include <strong>Services, Communications, Staples, Financials, and Utilities</strong>.</p>

We continue to be encouraged by market dynamics that are supportive of an ongoing equity bull market. Additionally, there continues to be an absence of breakdowns on the major global indexes (MSCI ACWI, ACWI ex-US, EM, &amp; EAFE). As a result, our outlook remains bullish.  In this report we show some love to various Sectors that have not been big attention-grabbers for us in recent months, but still have plenty of attractive stocks. The stocks highlighted hail from a variety of countries. Sectors covered include Services, Communications, Staples, Financials, and Utilities.

Global Equity Strategy: Market Dynamics Remain Positive, And So Are We

Japan

GMO Payment Gateway, Inc. provides credit card transaction services for electronic commerce firms.

Price Gauge
52-week Range	0.00 - 0.00
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GMO Payment Gateway (3769 JP)

Base Inc Bubble Is Still Far From Bursting

Following two extremely successful quarters, BASE Inc shares rallied more than 1,000% from its IPO price to reach a high of ¥16,510 per share...

Oshadhi Kumarasiri

🇯🇵 JAPAN • Results & Revisions 11/11 - Mitsubishi Estate, Toshiba, GMOs

Wednesday's best and worst pairing is from the same corporate grouping - GMO PG and GMO Internet and highlights the risks of investing in the...

Campbell Gunn

StubWorld: GMO Internet At Set-Up Levels

GMO Internet (9449 JP) is trading wide on a NAV basis, and its implied stub, with respect to GMO Payment Gateway (3769 JP), is at an all-time low.

David Blennerhassett

BASE Inc Moves to Service E-Commerce Via MOSH Acquisition

In our last insight, we suggested creating a short position when the share price peaked on 8th October. Since then, the share price has declined by...

Oshadhi Kumarasiri

Global Equity Strategy: Market Dynamics Remain Positive, And So Are We

We show some love to various Sectors that have not been big attention-grabbers for us in recent months, including Services, Communications,...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Base Inc Bubble Is Still Far From Bursting

Following two extremely successful quarters, BASE Inc shares rallied more than 1,000% from its IPO price to reach a high of ¥16,510 per share...

Oshadhi Kumarasiri

🇯🇵 JAPAN • Results & Revisions 11/​​​​​​​​​​​​​​​​​​​​​​​​​​11 - Mitsubishi Estate, Toshiba, GMOs

Wednesday's best and worst pairing is from the same corporate grouping - GMO PG and GMO Internet and highlights the risks of investing in the...

Campbell Gunn

StubWorld: GMO Internet At Set-Up Levels

GMO Internet (9449 JP) is trading wide on a NAV basis, and its implied stub, with respect to GMO Payment Gateway (3769 JP), is at an all-time low.

David Blennerhassett

BASE Inc Moves to Service E-Commerce Via MOSH Acquisition

In our last insight, we suggested creating a short position when the share price peaked on 8th October. Since then, the share price has declined by...

Oshadhi Kumarasiri

Global Equity Strategy: Market Dynamics Remain Positive, And So Are We

We show some love to various Sectors that have not been big attention-grabbers for us in recent months, including Services, Communications,...

Vermilion Research

🇯🇵 JAPAN • Results & Revisions 11/11 - Mitsubishi Estate, Toshiba, GMOs