Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

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><a href="https://www.smartkarma.com/entities/oro-co-ltd" target="_blank" data-smartkarma-citation="entities:26941:1" rel="noopener">oRo Co Ltd (3983 JP)</a> reported its 3Q2020 results today which saw 22.8% YoY decline in revenue while OP for the quarter dropped 32.1% YoY during the quarter. Both business segments saw YoY decline in revenue during the period. The company’s revenue and OP both fell below consensus estimates by 13.6% and 15.8% respectively.</p><p>In our previous insight on the company <a href="https://www.smartkarma.com/insights/oro-another-stock-capable-of-making-pm-suga-s-digitalisation-dream-a-real" target="_blank" data-smartkarma-citation="insights:43954" rel="noopener">oRo: Another Stock Capable of Making PM Suga’s Digitalisation Dream a Real</a> , we highlighted that the company’s revenues and margins are impacted by the ongoing Covid-19 pandemic. During the company’s 1H2020 earnings announcement, the company mentioned that the business conditions have recovered since June, however, 3Q2020 results show that the conditions have not yet improved as evident by the QoQ drop in revenue and margins.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/171/157/original/image_16203616221605205781684.png?1605205782" class="editor-image img-responsive" data-smartkarma-image-id="171157"></figure><div class="content-caption"><em>Source: Company Disclosures</em></div>

oRo Co Ltd (3983 JP) reported its 3Q2020 results today which saw 22.8% YoY decline in revenue while OP for the quarter dropped 32.1% YoY during the quarter. Both business segments saw YoY decline in revenue during the period. The company’s revenue and OP both fell below consensus estimates by 13.6% and 15.8% respectively.In our previous insight on the company oRo: Another Stock Capable of Making PM Suga’s Digitalisation Dream a Real , we highlighted that the company’s revenues and margins are impacted by the ongoing Covid-19 pandemic. During the company’s 1H2020 earnings announcement, the company mentioned that the business conditions have recovered since June, however, 3Q2020 results show that the conditions have not yet improved as evident by the QoQ drop in revenue and margins.Source: Company Disclosures

ORo: Earnings Growth Hasn’t Resumed Yet but We Are Looking for Entry Points

<p>M3 Inc. reported its 2QFY03/21 results last week. Both revenue and operating profit grew significantly compared to the same quarter last year by 28.5% YoY and 65.8% YoY respectively. At the same time, both revenue and OP beat consensus estimates by 7.2% and 26.6% respectively.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/170/077/original/image_87776018731604867251678.png?1604867253" class="editor-image img-responsive" data-smartkarma-image-id="170077"></figure><div class="content-caption"><em>Source: Company Disclosures, Cap IQ</em></div><p>We discuss the details below.</p>

M3 Inc. reported its 2QFY03/21 results last week. Both revenue and operating profit grew significantly compared to the same quarter last year by 28.5% YoY and 65.8% YoY respectively. At the same time, both revenue and OP beat consensus estimates by 7.2% and 26.6% respectively.Source: Company Disclosures, Cap IQWe discuss the details below.

M3 Inc: Strong Earnings Momentum Continues

<p><a href="https://www.smartkarma.com/entities/eguarantee-inc" target="_blank" data-smartkarma-citation="entities:6600:1" rel="noopener">eGuarantee, Inc. (8771 JP)</a> is engaged in the business of undertaking and transferring credit risks in Japan. The company offers guarantee services to about 70,000 businesses in Japan and the company transfers the credit risk of its portfolio across its several funds that are open to institutional investors. According to the company, it does not hold any risks associated with its credit portfolio and in the event of any bad debt, the fund will bear most of the costs.</p><p>The company shares have rallied 58% since the beginning of this year driven by the ongoing Covid-19 pandemic that is expected to cause a large number of businesses to go bankrupt in the country. During economic downturns and market volatilities, the company raises its guarantee fee to reflect the increased risk associated with its guaranteed counterparties, and any delay in payments.</p>

eGuarantee, Inc. (8771 JP) is engaged in the business of undertaking and transferring credit risks in Japan. The company offers guarantee services to about 70,000 businesses in Japan and the company transfers the credit risk of its portfolio across its several funds that are open to institutional investors. According to the company, it does not hold any risks associated with its credit portfolio and in the event of any bad debt, the fund will bear most of the costs.The company shares have rallied 58% since the beginning of this year driven by the ongoing Covid-19 pandemic that is expected to cause a large number of businesses to go bankrupt in the country. During economic downturns and market volatilities, the company raises its guarantee fee to reflect the increased risk associated with its guaranteed counterparties, and any delay in payments.

EGuarantee: A Resilient Business Model that Should Further Benefit from Pandemic Driven-Demand

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>MOTHERS-listed <a href="https://www.smartkarma.com/entities/26758" target="_blank" data-smartkarma-citation="entities:26758:1">J-Lease Co Ltd (7187 JP)</a> is a rent-guarantee company for residential and office properties which was listed in June 2016. In the year to March 2017, the company cleared the two-year profit hurdle for listing on TSE1 and in June of 2017 cleared the 1-year-since-listing hurdle. </p><p>The company did not meet the shareholder count hurdle (2200 shareholders) but applied for reassignment to the TSE anyway, and two weeks after under-shooting expectations when reporting Q3 earnings on Feb 7th…</p>

MOTHERS-listed J-Lease Co Ltd (7187 JP) is a rent-guarantee company for residential and office properties which was listed in June 2016. In the year to March 2017, the company cleared the two-year profit hurdle for listing on TSE1 and in June of 2017 cleared the 1-year-since-listing hurdle. The company did not meet the shareholder count hurdle (2200 shareholders) but applied for reassignment to the TSE anyway, and two weeks after under-shooting expectations when reporting Q3 earnings on Feb 7th…

J-Lease (7187 JP) - Smallcap TSE1 Promotion & TOPIX Inclusion

Doing bespoke work since 2002....., Custom Products Group

Patrick Hansen

Doing bespoke work since 2002.....

Custom Products Group

Custom Products was started 14 years ago at Lehman Brothers by current co-founder Patrick Hansen, CFA. After 3 years at Lehman, Patrick moved the team to Macquarie Securities where Simon Rigney (co-founder) joined. 3 years ago we took Custom Products independent. 

Our core strength can be summed up three words. 1- Customization - we have very little off the shelf products and most work is done on a one on one bespoke basis. 2- Speed - We pride ourselves in our ability to get requests back to the client very quickly. 3- Confidentiality - We do not redistribute. There is no grace period where we wait a week and then mass blast. Any request stops with that client.

Thematic (Sector/Industry)

<p>I know we usually focus on Value in Japan, but sometimes it is worth looking for Growth names. We first limited the universe to names with mkt-cap below ¥200bn. We then screened for names that had positive YoY quarterly growth every quarter for the last 3 years. 98 names made that list.</p><p>We cut the list down to 24 names by limiting it to names that have also had positive quarterly OP  growth 12 out of the last 13 quarters.</p><h2>Screen Results </h2><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/029/859/original/2.png?1500323285" class="editor-image img-responsive" data-smartkarma-image-id="29859"></figure><div class="content-caption">Source: Custom Products</div><p>As you can see from the table above…</p>

I know we usually focus on Value in Japan, but sometimes it is worth looking for Growth names. We first limited the universe to names with mkt-cap below ¥200bn. We then screened for names that had positive YoY quarterly growth every quarter for the last 3 years. 98 names made that list.We cut the list down to 24 names by limiting it to names that have also had positive quarterly OP  growth 12 out of the last 13 quarters.Screen Results Source: Custom ProductsAs you can see from the table above…

Japan

eGuarantee, Inc. offers guarantee services for accounts and note receivables arising from business and financial service transactions. The Company analyzes the credit risk of receivables and loans. eGuarantee also provides consulting services for credit risk and credit management.

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eGuarantee, Inc. (8771 JP)

ORo: Earnings Growth Hasn’t Resumed Yet but We Are Looking for Entry Points

oRo reported its 3Q2020 results today which saw 22.8% YoY decline in revenue while OP for the quarter dropped 32.1% YoY during the quarter.

Shifara Samsudeen, FCMA, CGMA

M3 Inc: Strong Earnings Momentum Continues

M3 reported its 2QFY03/21 results which saw both revenue and operating profit grew significantly compared to the same quarter last year by 28.5%...

Shifara Samsudeen, FCMA, CGMA

EGuarantee: A Resilient Business Model that Should Further Benefit from Pandemic Driven-Demand

eGuarantee is engaged in the business of undertaking and transferring credit risks in Japan. In this insight, we deep dive into eGuarantee's...

Shifara Samsudeen, FCMA, CGMA

J-Lease (7187 JP) - Smallcap TSE1 Promotion & TOPIX Inclusion

MOTHERS-listed J-Lease Co Ltd (7187 JP) is a rent-guarantee company for residential and office properties which was listed in June 2016. In the...

Travis Lundy

Small-Cap Growth Names in Japan....

I know we usually focus on Value in Japan, but sometimes it is worth looking for Growth names. We first limited the universe to names with mkt-cap...

Custom Products Group

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