Telco/Internet specialist

Kirk Boodry

Redex Research

Thematic (Sector/Industry)

<ul>
<li>MIC data provides further support that regulatory pressure was successful in driving down industry prices with 40mn users on discount plans that are among the cheapest globally</li>
<li>That has led to ¥230-250bn in service revenue erosion for both FY21 and FY22e but evidence of a solid win for regulators reassures that further action isn't needed</li>
<li>Handset pricing is on the rise as 5G proliferates, which is good news for incumbents that can lock users in through instalment payment plans</li>
</ul>


MIC data provides further support that regulatory pressure was successful in driving down industry prices with 40mn users on discount plans that are among the cheapest globally
That has led to ¥230-250bn in service revenue erosion for both FY21 and FY22e but evidence of a solid win for regulators reassures that further action isn't needed
Handset pricing is on the rise as 5G proliferates, which is good news for incumbents that can lock users in through instalment payment plans


Japan Telecoms - Update from Regulators’ Competition Working Group

Equity Bottom-Up

<ul>
<li>KDDI's entire network was out over the weekend and whilst service has been restored, there are still sporadic complaints </li>
<li>There are near-term risks for higher user churn and lost Q2 revenue, but these are on the margin and downside should be manageable (i.e. no change on company guidance)</li>
<li>Looking past near-term weakness, KDDI remains an attractive defensive play </li>
</ul>


KDDI's entire network was out over the weekend and whilst service has been restored, there are still sporadic complaints 
There are near-term risks for higher user churn and lost Q2 revenue, but these are on the margin and downside should be manageable (i.e. no change on company guidance)
Looking past near-term weakness, KDDI remains an attractive defensive play 


KDDI (Buy) - Network Outage Is a Bad Look but Concerns Should Fade over Time

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>Many indexes (ACWI-US,ACWX-US,etc.) are near support, and we could see a bear market bounce, but until these indexes reverse their downtrends and break above resistance levels, we cannot be bullish.</li>
<li>On a positive note, we are starting to see signs that inflation is peaking, as commodity prices have pulled back substantially, and the Energy/Materials Sectors are under significant pressure.</li>
<li>If inflation and commodity prices have indeed peaked, global equities are likely in the early stages of a bottoming process.</li>
</ul>


Many indexes (ACWI-US,ACWX-US,etc.) are near support, and we could see a bear market bounce, but until these indexes reverse their downtrends and break above resistance levels, we cannot be bullish.
On a positive note, we are starting to see signs that inflation is peaking, as commodity prices have pulled back substantially, and the Energy/Materials Sectors are under significant pressure.
If inflation and commodity prices have indeed peaked, global equities are likely in the early stages of a bottoming process.


Inflation Peaking?; ACWI, ACWI Ex-US Near Support; Many Bottoms-Up Stock Recommendations

Internet Initiative Japan / Equity Bottom-Up

<ul>
<li>Q4 and FY22 guidance beat driven by growth in corporate DX demand and margin discipline</li>
<li>Company expects FY22 double-digit revenue growth as mobile headwinds fade and has re-set its mid-term profitability target. Implied FY23 OP is 28% higher than year-ago forecasts</li>
<li>Near-Term profitability beat ties in to shareholder returns and FY21 DPS has been raised to ¥48 from ¥46 with further growth in FY22. We remain at Buy.</li>
</ul>


Q4 and FY22 guidance beat driven by growth in corporate DX demand and margin discipline
Company expects FY22 double-digit revenue growth as mobile headwinds fade and has re-set its mid-term profitability target. Implied FY23 OP is 28% higher than year-ago forecasts
Near-Term profitability beat ties in to shareholder returns and FY21 DPS has been raised to ¥48 from ¥46 with further growth in FY22. We remain at Buy.


IIJ (Buy) - Q4 21 Results Reaction: Reliable Growth and Margin Expansion

<ul>
<li>Revenue grew 4% in Q3 despite an acceleration in mobile erosion as core fixed-line revenue growth remained robust.</li>
<li>Revenue growth unlocks operating leverage as margins reached record levels helped in part by lower mobile interconnect charges from DoCoMo.</li>
<li>We remain at Buy and consider IIJ a core telecom holding in Japan</li>
</ul>


Revenue grew 4% in Q3 despite an acceleration in mobile erosion as core fixed-line revenue growth remained robust.
Revenue growth unlocks operating leverage as margins reached record levels helped in part by lower mobile interconnect charges from DoCoMo.
We remain at Buy and consider IIJ a core telecom holding in Japan


IIJ (Buy) - Q3 21 Results Reaction: Core Business Drives Record Quarter

Japan

Internet Initiative Japan Inc. provides Internet connection services for businesses.  The Company also provides system integration services and sells system equipments.  Internet Initiative Japan offers a variety of services, including network consulting, security, and Web hosting as well.

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Internet Initiative Japan (3774 JP)

Japan Telecoms - Update from Regulators’ Competition Working Group

Further evidence that price reductions have met expectations as regulator working group prepares its final report on the competition. NTT remains...

Kirk Boodry

KDDI (Buy) - Network Outage Is a Bad Look but Concerns Should Fade over Time

KDDI's network outage was large-scale but financial and operational impacts should be limited to Q2 and our overall outlook on the stock as an...

Kirk Boodry

Inflation Peaking?; ACWI, ACWI Ex-US Near Support; Many Bottoms-Up Stock Recommendations

We're starting to see signs that inflation is peaking, as commodity prices have pulled back substantially or are breaking, and the Energy $XLE and...

Vermilion Research

IIJ (Buy) - Q4 21 Results Reaction: Reliable Growth and Margin Expansion

IIJ continues to reap the rewards of corporate DX demand. Cloud/security revenue are growing the fastest in two years setting the stage for double...

Kirk Boodry

IIJ (Buy) - Q3 21 Results Reaction: Core Business Drives Record Quarter

IIJ is on track to meet and probably exceed full-year guidance as growth in new services revenue for corporate users highlights IIJ’s exposure to...

Kirk Boodry

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