Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, 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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">Freee KK (4478 JP)</a> reported 2QFY06/2024 results today. 2Q revenue increased 35.1% YoY, however, both revenue and operating losses fell below consensus estimates.</li>
<li>As expected, upfront investment in selling and marketing and personnel expenses prior to the new invoicing system led to an increase in operating losses.</li>
<li>However, these investments have helped the company acquire a large no. of corporate paying users and we expect losses to decline going forward.</li>
</ul>



Freee KK (4478 JP) reported 2QFY06/2024 results today. 2Q revenue increased 35.1% YoY, however, both revenue and operating losses fell below consensus estimates.
As expected, upfront investment in selling and marketing and personnel expenses prior to the new invoicing system led to an increase in operating losses.
However, these investments have helped the company acquire a large no. of corporate paying users and we expect losses to decline going forward.


Freee: New Invoicing System Helps Onboard Corporate Clients Though Losses Widen

<ul>
<li>
<a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">Freee KK (4478 JP)</a> ’s 1QFY06/2024 results beat consensus estimates. Introduction of qualified invoicing system in October has resulted in strong corporate user growth for the company.</li>
<li>Upfront investment in selling and marketing has helped freee onboard a large no. of corporate clients prior to the introduction of the new invoice system.</li>
<li>Freee expects selling and advertising spending to decline going forward which should help the company reach break-even in FY06/2025E.</li>
</ul>



Freee KK (4478 JP) ’s 1QFY06/2024 results beat consensus estimates. Introduction of qualified invoicing system in October has resulted in strong corporate user growth for the company.
Upfront investment in selling and marketing has helped freee onboard a large no. of corporate clients prior to the introduction of the new invoice system.
Freee expects selling and advertising spending to decline going forward which should help the company reach break-even in FY06/2025E.


Freee 1Q: Earnings Beat; Qualified Invoice System to Further Drive Earnings

<ul>
<li>Freee reported 4QFY06/23 results today. Revenue increased 39.6% YoY to ¥5.4bn (vs consensus ¥5.32bn) while operating losses increased to ¥3.0bn from ¥724m in 4QFY06/2022 (vs consensus ¥2.5bn).</li>
<li>
<a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">Freee KK (4478 JP)</a> ’s full-year revenues and operating losses were in line with the company’s guidance, and increased losses were due to investments related to growth and customer acquisition.</li>
<li>The company’s medium-term plan expects revenues of more than ¥50.0bn by FY06/2027E and operating profits by FY06/2025E which seems attainable to us.</li>
</ul>


Freee reported 4QFY06/23 results today. Revenue increased 39.6% YoY to ¥5.4bn (vs consensus ¥5.32bn) while operating losses increased to ¥3.0bn from ¥724m in 4QFY06/2022 (vs consensus ¥2.5bn).

Freee KK (4478 JP) ’s full-year revenues and operating losses were in line with the company’s guidance, and increased losses were due to investments related to growth and customer acquisition.
The company’s medium-term plan expects revenues of more than ¥50.0bn by FY06/2027E and operating profits by FY06/2025E which seems attainable to us.


Freee: Earnings in Line With Guidance; Medium-Term Plan Seems Attainable

<ul>
<li>
<a href="https://www.smartkarma.com/entities/Freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">freee (4478 JP)</a> reported 3QFY06/2023 results. Revenue increased 39.5% YoY to ¥5.1bn (vs consensus ¥4.9bn) while adj. operating losses increased to ¥1.9bn (vs consensus ¥1.9bn) from ¥676m in 3QFY03/2022.</li>
<li>Widened operating losses is no big surprise as freee had already guided for increased investments related to invoicing system and tax filing season which has helped increase paying user numbers.</li>
<li>As we continue to emphasise, freee’s business model is superior to that of MF who has resorted to several mediocre businesses (non-BA SAAS) to pursue aggressive top line growth.</li>
</ul>



freee (4478 JP) reported 3QFY06/2023 results. Revenue increased 39.5% YoY to ¥5.1bn (vs consensus ¥4.9bn) while adj. operating losses increased to ¥1.9bn (vs consensus ¥1.9bn) from ¥676m in 3QFY03/2022.
Widened operating losses is no big surprise as freee had already guided for increased investments related to invoicing system and tax filing season which has helped increase paying user numbers.
As we continue to emphasise, freee’s business model is superior to that of MF who has resorted to several mediocre businesses (non-BA SAAS) to pursue aggressive top line growth.


Freee: User Acquisition Strategy Paying Off

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>Three shareholders of <a href="https://www.smartkarma.com/entities/socionext-inc" target="_blank" data-smartkarma-citation="entities:36351:1" rel="noopener">Socionext (6526 JP)</a> aim to raise around US$1.8bn via selling all of their shares in Socionext.</li>
<li>Socionext was listed on 12th Oct 2022, when it raised US$457m in its upsized Japan IPO. Its six-month lockup expired in Apr 2023. Its shares are up 6x since listing.</li>
<li>In this note, we talk about the deal dynamics and run the deal through our ECM framework.</li>
</ul>


Three shareholders of Socionext (6526 JP) aim to raise around US$1.8bn via selling all of their shares in Socionext.
Socionext was listed on 12th Oct 2022, when it raised US$457m in its upsized Japan IPO. Its six-month lockup expired in Apr 2023. Its shares are up 6x since listing.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.


Socionext Placement - A US$1.8bn Cleanup, Will Have to Give up Some of Its 6x Listing Gains

Japan

freee K.K. develops software products. The Company produces cloud based accounting softwares, automatic online accounting systems, and other products. freee provides its services throughout Japan.

Freee KK (4478 JP)

Freee: New Invoicing System Helps Onboard Corporate Clients Though Losses Widen

As we expected, freee's operating losses further expanded in 2Q due to upfront investment related to the new invoicing system. However, it has...

Shifara Samsudeen, ACMA, CGMA

Freee 1Q: Earnings Beat; Qualified Invoice System to Further Drive Earnings

Freee's upfront investment in S&M has enabled to onboard a large no. of corporate clients prior to the introduction of the new invoice system....

Shifara Samsudeen, ACMA, CGMA

Freee: Earnings in Line With Guidance; Medium-Term Plan Seems Attainable

As guided, freee's operating losses have widened during the quarter. Corporate paying users have grown significantly and Mid-term plan aims for...

Shifara Samsudeen, ACMA, CGMA

Freee: User Acquisition Strategy Paying Off

Widened operating losses is no big surprise as freee had already guided for increased investments related to invoicing system and tax filing...

Shifara Samsudeen, ACMA, CGMA

Socionext Placement - A US$1.8bn Cleanup, Will Have to Give up Some of Its 6x Listing Gains

Three shareholders of Socionext (6526 JP) aim to raise around US$1.8bn via selling shares in Socionext. In this note we talk about the deal...

Sumeet Singh