Research from Asian Century Stocks, Asian Century Stocks

Michael Fritzell

Research from Asian Century Stocks

Providing financial journalism in the Asia-Pacific

Asian Century Stocks

Asian Century Stocks is a newsletter providing financial journalism for companies and stocks in the Asia-Pacific. 
The Asian Century Stocks logotype “百” stands for “one hundred” or a “century”. The economic centre of gravity is moving towards Asia. Yet most global investors are missing out.

Equity Bottom-Up

<ul>
<li>
I’m fascinated by the market for second-hand goods.
</li>
<li>
eBay has existed for many decades, but it was only with the smartphone that the market took off.
</li>
<li>
With a smartphone, you could snap a photo of your item and post it online within minutes. 
</li>
</ul>



I’m fascinated by the market for second-hand goods.


eBay has existed for many decades, but it was only with the smartphone that the market took off.


With a smartphone, you could snap a photo of your item and post it online within minutes. 



Mercari (4385 JP): Japan’s Leading C2C Trading App at 14x P/E with Margin Uplift Potential

Japan Specialist

Mark Chadwick

<ul>
<li>
Record Margins: Q2 OP surged 82% YoY to ¥7.1b, with Japan profitability up and losses narrowing in Fintech and the US.</li>
<li>
US Breakeven Play: Aggressive cost-cutting led to 12ppt margin improvement; if growth stalls, a sale or exit could boost margins by 200bps.</li>
<li>
Fintech Upside: Losses peaked last year, with 16ppt OPM improvement; breaking even could add 400bps to group margins.</li>
</ul>



Record Margins: Q2 OP surged 82% YoY to ¥7.1b, with Japan profitability up and losses narrowing in Fintech and the US.

US Breakeven Play: Aggressive cost-cutting led to 12ppt margin improvement; if growth stalls, a sale or exit could boost margins by 200bps.

Fintech Upside: Losses peaked last year, with 16ppt OPM improvement; breaking even could add 400bps to group margins.


Mercari (4385) | Profitability on the Rise with More Levers to Pull

<ul>
<li>Q4 results were a mixed bag with GMV growth slowing to just 6%. However, costs came in better than expected, boosting margins</li>
<li>Management surprise the market with bullish FY6/25 guidance. Expects GMV growth to accelerate to +10% and sees OP at a healthy 22-25 billion yen</li>
<li>Activist investor Oasis has taken a stake in the company. There is an obvious restructuring angle in addition to significant upside from fintech expansion </li>
</ul>


Q4 results were a mixed bag with GMV growth slowing to just 6%. However, costs came in better than expected, boosting margins
Management surprise the market with bullish FY6/25 guidance. Expects GMV growth to accelerate to +10% and sees OP at a healthy 22-25 billion yen
Activist investor Oasis has taken a stake in the company. There is an obvious restructuring angle in addition to significant upside from fintech expansion 


Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a> investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.</li>
<li>It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good. </li>
<li>Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.</li>
</ul>



Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good. 
Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.


Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari Inc (4385 JP)</a> is potentially a leading candidate for inclusion in the Nikkei 225 in September. </li>
<li>There are other technical reasons to think it is not. </li>
<li>This insight looks at the issue of why it might be a leading candidate and why it might not be. </li>
</ul>



Mercari Inc (4385 JP) is potentially a leading candidate for inclusion in the Nikkei 225 in September. 
There are other technical reasons to think it is not. 
This insight looks at the issue of why it might be a leading candidate and why it might not be. 


Nikkei 225 Sep 2023 Review - The Mercari Conundrum

Japan

Mercari, Inc. operates as an electronic commercial company. The Company offers electronic commercial software, operation management, marketing planning, and other marketplace services. Mercari serves customers worldwide.

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Mercari (4385 JP)

Mercari (4385 JP): Japan’s Leading C2C Trading App at 14x P/E with Margin Uplift Potential

I’m fascinated by the market for second-hand goods. eBay has existed for many decades, but it was only with the smartphone that the market took off.

Asian Century Stocks

Mercari (4385) | Profitability on the Rise with More Levers to Pull

Q2 saw record margins with Japan profitability up and losses narrowing in Fintech and the US; A US exit could lead to further margin improvement,...

Mark Chadwick

Mercari (4385) | Activist to Add Urgency

Q4 results show slowing GMV growth but better costs, management bullish on FY6/25 guidance, activist investor sees restructuring and fintech upside.

Mark Chadwick

Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity

Fast Retailing announced decent earnings for Q3 and upgraded forecasts for August 2023. It also raised its full-year dividend vs previous guidance....

Travis Lundy

Nikkei 225 Sep 2023 Review - The Mercari Conundrum

Mercari is either a leading candidate for Nikkei 225 inclusion in September 2023. Or it is not. It depends on how you mash the data, interpret the...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Mercari (4385 JP): Japan’s Leading C2C Trading App at 14x P/E with Margin Uplift Potential

I’m fascinated by the market for second-hand goods. eBay has existed for many decades, but it was only with the smartphone that the market took off.

Asian Century Stocks

Mercari (4385) | Profitability on the Rise with More Levers to Pull

​Q2 saw record margins with Japan profitability up and losses narrowing in Fintech and the US; A US exit could lead to further margin improvement,...

Mark Chadwick

Mercari (4385) | Activist to Add Urgency

​Q4 results show slowing GMV growth but better costs, management bullish on FY6/25 guidance, activist investor sees restructuring and fintech upside.

Mark Chadwick

Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity

Fast Retailing announced decent earnings for Q3 and upgraded forecasts for August 2023. It also raised its full-year dividend vs previous guidance....

Travis Lundy

Nikkei 225 Sep 2023 Review - The Mercari Conundrum

Mercari is either a leading candidate for Nikkei 225 inclusion in September 2023. Or it is not. It depends on how you mash the data, interpret the...

Travis Lundy

Q2 saw record margins with Japan profitability up and losses narrowing in Fintech and the US; A US exit could lead to further margin improvement,...

Q4 results show slowing GMV growth but better costs, management bullish on FY6/25 guidance, activist investor sees restructuring and fintech upside.