IR & Research Intelligence, Sessa Investment Research

Sessa Investment Research

IR & Research Intelligence

Sponsored research focusing on Japanese small cap.

Equity Bottom-Up

Frontier Management Inc / Equity Bottom-Up

<ul><li>In 2Q, net sales rose 26%, operating profit rose 28%, and net profit rose 46%.</li><li>The strong growth in net profit is attributed to the absence of the loss on valuation of investment securities recorded in the previous year.</li><li>Management Consulting business continued to perform well with sales rising 16%.</li></ul>

In 2Q, net sales rose 26%, operating profit rose 28%, and net profit rose 46%.The strong growth in net profit is attributed to the absence of the loss on valuation of investment securities recorded in the previous year.Management Consulting business continued to perform well with sales rising 16%.

2Q Follow-Up - Frontier Management Inc. (7038 JP) - Aug. 23, 2023

<ul><li>1Q operating profit rose 18%, on a 19% rise in sales. Net profit rose 10%.</li><li>According to the company's data, the pace of increase in orders has been increasing since around the last week of 1Q, indicating a potential for stronger results in this FY.</li><li>Management Consulting business sales rose 14%.</li></ul>

1Q operating profit rose 18%, on a 19% rise in sales. Net profit rose 10%.According to the company's data, the pace of increase in orders has been increasing since around the last week of 1Q, indicating a potential for stronger results in this FY.Management Consulting business sales rose 14%.

Frontier Management Inc. (7038 JP) - 1Q Follow-Up

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Quantitative Analysis

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When Japanese small-cap stocks listed on JASDAQ, MOTHERS, and the Second Section of the Tokyo Stock Exchange aim at the big leagues and apply for reassignment to the First Section of the Tokyo Stock Exchange and are accepted, it causes significant events to occur.
This triggers inclusion into the TOPIX Index which means passive funds tracking TOPIX need to buy on an inclusion event. This opens up several interesting trading opportunities for investors. 
In this insight, I have provided performance updates for 3 "Live" event stocks which have announced their TSE1 move in  October 2020 and 5 "Post" event stocks that completed their Inclusion Events today and some Pre-event trades involving stocks that are likely to become TSE1-promotion candidates in the near future. 
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When Japanese small-cap stocks listed on JASDAQ, MOTHERS, and the Second Section of the Tokyo Stock Exchange aim at the big leagues and apply for reassignment to the First Section of the Tokyo Stock Exchange and are accepted, it causes significant events to occur.
This triggers inclusion into the TOPIX Index which means passive funds tracking TOPIX need to buy on an inclusion event. This opens up several interesting trading opportunities for investors. 
In this insight, I have provided performance updates for 3 "Live" event stocks which have announced their TSE1 move in  October 2020 and 5 "Post" event stocks that completed their Inclusion Events today and some Pre-event trades involving stocks that are likely to become TSE1-promotion candidates in the near future. 


Japan Specialist

Mark Chadwick

<div><a href="https://www.smartkarma.com/entities/frontier-management-inc" target="_blank" data-smartkarma-citation="entities:29135:1" rel="noopener">Frontier Management Inc (7038 JP)</a>  (FM) has seen its stock rise 330% over the past year, far outpacing rivals in investment banking and consulting services.  </div><div>While the Corona virus impacted FM’s ability to close cross-border M&amp;A deals in 1H20, the management consulting and business revitalization work grew solidly. The group’s more aggressive headcount additions suggest confidence in the 2H pipeline and longer-term outlook.  </div><div>Demographic and economic shifts in Japan are propelling demand for business strategy and M&amp;A consulting in Japan. Moreover, with the introduction of the corporate governance and stewardship codes, Japanese companies are facing scrutiny to improve financial returns, improve profitability and maximize shareholder returns. These trends are likely to remain a tailwind for Frontier’s core services.  </div>

Frontier Management Inc (7038 JP)  (FM) has seen its stock rise 330% over the past year, far outpacing rivals in investment banking and consulting services.  While the Corona virus impacted FM’s ability to close cross-border M&amp;A deals in 1H20, the management consulting and business revitalization work grew solidly. The group’s more aggressive headcount additions suggest confidence in the 2H pipeline and longer-term outlook.  Demographic and economic shifts in Japan are propelling demand for business strategy and M&amp;A consulting in Japan. Moreover, with the introduction of the corporate governance and stewardship codes, Japanese companies are facing scrutiny to improve financial returns, improve profitability and maximize shareholder returns. These trends are likely to remain a tailwind for Frontier’s core services.  

Small Cap Growth: Frontier Management (7038) - Borderless Services

In late July 2020, the Tokyo Stock Exchange issued Revisions to Listing Rules to Enhance Functions for Raising Funds through the Capital Market. These were discussed by <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> in <a href="https://www.smartkarma.com/insights/the-tse-s-listing-criteria-revisions-part-i" target="_blank" data-smartkarma-citation="insights:43150" rel="noopener">The TSE's Listing Criteria Revisions - Part I</a>.These revisions have very important implications to Pre-event trades in the TOPIX Inclusions Universe as fewer candidates will be able to meet these more-stringent new requirements. In this insight, we take a look at how these new requirements will influence our Pre-event trades. In addition, I have also provided performance updates for 5 "Live" events which have announced their TSE1 move in September 2020 and 6 "Post" events that involves stocks which have already had their Inclusion events in August 2020. As noted last month, unusually there were no inclusions for September due to section/segment reassignment.As always, there is more below the fold.

In late July 2020, the Tokyo Stock Exchange issued Revisions to Listing Rules to Enhance Functions for Raising Funds through the Capital Market. These were discussed by Travis Lundy in The TSE's Listing Criteria Revisions - Part I.These revisions have very important implications to Pre-event trades in the TOPIX Inclusions Universe as fewer candidates will be able to meet these more-stringent new requirements. In this insight, we take a look at how these new requirements will influence our Pre-event trades. In addition, I have also provided performance updates for 5 "Live" events which have announced their TSE1 move in September 2020 and 6 "Post" events that involves stocks which have already had their Inclusion events in August 2020. As noted last month, unusually there were no inclusions for September due to section/segment reassignment.As always, there is more below the fold. 

Japan

Frontier Management Inc. offers business consulting services. The Company provides management consulting, mergers and acquisitions advisory, management executive support, and business regeneration support services. Frontier Management offers services in Japan.

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Frontier Management Inc (7038 JP)

2Q Follow-Up - Frontier Management Inc. (7038 JP) - Aug. 23, 2023

Steady progress against earnings forecast 2Q operating profit at 58% of full-year forecast. In 2Q, net sales rose 26%, operating profit rose 28%,...

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