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

<ul>
<li>Both management and consensus seem to think that <a href="https://www.smartkarma.com/entities/base-inc" target="_blank" data-smartkarma-citation="entities:28353:1" rel="noopener">BASE Inc (4477 JP)</a> will be able to maintain the COVID-19 growth trajectory beyond the COVID affected years.</li>
<li>However, investors seem more circumspect with shares currently trading around 90% below the peak level.</li>
<li>With the company likely failing to meet revenue targets and losses expanding exponentially, we think Base Inc could fall another 25-30% towards the pre-COVID level.</li>
</ul>


Both management and consensus seem to think that BASE Inc (4477 JP) will be able to maintain the COVID-19 growth trajectory beyond the COVID affected years.
However, investors seem more circumspect with shares currently trading around 90% below the peak level.
With the company likely failing to meet revenue targets and losses expanding exponentially, we think Base Inc could fall another 25-30% towards the pre-COVID level.


Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

<ul>
<li>We remain very optimistic about the outlook for Mercari's fundamentals, both gross transaction values and operating margins.</li>
<li>The sharing economy in Japan alone remains nascent and Mercari has only just started adding on adjunct value-add services, most of which are (and will) carry high margins.</li>
<li>Even in the core fashion category, which some analysts have assumed is already reaching saturation, CtoC platforms and used retailers have barely scratched the surface as new research shows.</li>
</ul>


We remain very optimistic about the outlook for Mercari's fundamentals, both gross transaction values and operating margins.
The sharing economy in Japan alone remains nascent and Mercari has only just started adding on adjunct value-add services, most of which are (and will) carry high margins.
Even in the core fashion category, which some analysts have assumed is already reaching saturation, CtoC platforms and used retailers have barely scratched the surface as new research shows.


2022 High Conviction – Plenty of Growth Avenues for Mercari, the Apple of CtoC Services

<ul>
<li>Mercari shipments now account for between 5-10% of Japan’s 5 billion express deliveries so couriers are straining under the onslaught.</li>
<li>Mercari plans to invest in easy access for drop-off and pick up points as well as more efficient shipping and will then monetise this through add-on services.</li>
<li>Once in place, Mercari plans to allow other online merchants on to this network as well as merchants on its new B2C platform, Mercari Shops, creating another income stream.</li>
</ul>


Mercari shipments now account for between 5-10% of Japan’s 5 billion express deliveries so couriers are straining under the onslaught.
Mercari plans to invest in easy access for drop-off and pick up points as well as more efficient shipping and will then monetise this through add-on services.
Once in place, Mercari plans to allow other online merchants on to this network as well as merchants on its new B2C platform, Mercari Shops, creating another income stream.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/base-inc" target="_blank" data-smartkarma-citation="entities:28353:1" rel="noopener">BASE Inc (4477 JP)</a> is Japan’s equivalent of Shopify and helps individual sellers and small businesses to easily establish an e-commerce presence.</li>
<li>As of May 2021, BASE has helped over 1.6m individual sellers and small businesses to open e-commerce shops.</li>
<li>This small company from Japan took the attention of institutional investors during the March to October 2020 period as the COVID driven increase in e-Commerce penetration resulted in a 1700%+ increase in the company’s share price.</li>
<li>Slowing growth amidst increased marketing spending has resulted in a 72% decrease in the company’s share price from the October 2020 peak level. Nevertheless, we believe that there’s further downside to Base Inc as consensus remains too optimistic about Base Inc’s medium-term growth when there are obvious signs that say otherwise.</li>
</ul>



BASE Inc (4477 JP) is Japan’s equivalent of Shopify and helps individual sellers and small businesses to easily establish an e-commerce presence.
As of May 2021, BASE has helped over 1.6m individual sellers and small businesses to open e-commerce shops.
This small company from Japan took the attention of institutional investors during the March to October 2020 period as the COVID driven increase in e-Commerce penetration resulted in a 1700%+ increase in the company’s share price.
Slowing growth amidst increased marketing spending has resulted in a 72% decrease in the company’s share price from the October 2020 peak level. Nevertheless, we believe that there’s further downside to Base Inc as consensus remains too optimistic about Base Inc’s medium-term growth when there are obvious signs that say otherwise.


<a href="https://www.smartkarma.com/entities/base-inc" target="_blank" data-smartkarma-citation="entities:28353:1" rel="noopener">BASE Inc (4477 JP)</a>, Japan’s equivalent of Shopify has found revenue growth hard to come by, ever since recording 177% YoY and 127% QoQ growth in 2Q20 amidst an accelerated shift to e-commerce during the early days of the COVID-19 pandemic. As a result, the company’s share price has plunged around 68% from the peak to currently trade at around ¥1,032.0 per share.Driven by a 101% YoY and 43% QoQ increase in promotional spending, Base Inc’s revenue has shown some promise with 9.3% QoQ revenue growth in 2Q21 but the revenue remained 4.3% below the 2Q20 peak level.Nevertheless, we think “BASE” is running out of room to grow in the domestic market, while “PAY” (the main growth driver of Base Inc over the last four quarters), whose revenue grew 70.4% YoY and 23.4% QoQ in 2Q21, is expected to decelerate rapidly following a period of GMV expansion through the recovery of business operations of its merchants after the gradual easing of COVID-19 restrictions.

BASE Inc (4477 JP), Japan’s equivalent of Shopify has found revenue growth hard to come by, ever since recording 177% YoY and 127% QoQ growth in 2Q20 amidst an accelerated shift to e-commerce during the early days of the COVID-19 pandemic. As a result, the company’s share price has plunged around 68% from the peak to currently trade at around ¥1,032.0 per share.Driven by a 101% YoY and 43% QoQ increase in promotional spending, Base Inc’s revenue has shown some promise with 9.3% QoQ revenue growth in 2Q21 but the revenue remained 4.3% below the 2Q20 peak level.Nevertheless, we think “BASE” is running out of room to grow in the domestic market, while “PAY” (the main growth driver of Base Inc over the last four quarters), whose revenue grew 70.4% YoY and 23.4% QoQ in 2Q21, is expected to decelerate rapidly following a period of GMV expansion through the recovery of business operations of its merchants after the gradual easing of COVID-19 restrictions.

Base Inc: The Long Tail May Not Be That Long

Japan

BASE, Inc. offers internet based services. The Company provides net shop creation, shopping application development, online payment development, and other services. BASE provides its services throughout Japan.

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BASE Inc (4477 JP)

Base Inc: Down, But Not Down Enough

With the company likely failing to meet consensus medium-term revenue targets and losses expanding exponentially through venturing into new...

Oshadhi Kumarasiri

2022 High Conviction – Plenty of Growth Avenues for Mercari, the Apple of CtoC Services

Mercari is much, much more than its CtoC platform and will emerge as a pivotal part of Japan's consumer goods/services/finance distribution system...

Michael Causton

Mercari to Offer Logistics to All

Mercari now has 3 business segments: CtoC, Payments and Online Storefronts. It will now add a 4th: logistics and a host of services surrounding...

Michael Causton

Base Inc: Losing Its Base

Slowing growth amidst increased marketing spending has resulted in a 72% decrease in the company’s share price from the October 2020 peak level....

Oshadhi Kumarasiri

Base Inc: The Long Tail May Not Be That Long

BASE Inc, Japan’s equivalent of Shopify has found revenue growth hard to come by, ever since recording 177% YoY and 127% QoQ growth in 2Q20 amidst...

Oshadhi Kumarasiri

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