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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a> reported 3QFY03/2025 earnings today. Both revenue and OP grew YoY as well as beat consensus estimates. Most of revenue growth came from the ELAN acquisition.</li>
<li>Medical Platform’s earnings have continued to decline as a result of spending cuts by pharmaceutical companies while there has been a slight improvement in Overseas earnings during the quarter.</li>
<li>Though the overall declining trend in m3’s earnings has eased, we expect the earnings growth to remain weak. ELAN’s margins have continued to deteriorate.</li>
</ul>



M3 Inc (2413 JP) reported 3QFY03/2025 earnings today. Both revenue and OP grew YoY as well as beat consensus estimates. Most of revenue growth came from the ELAN acquisition.
Medical Platform’s earnings have continued to decline as a result of spending cuts by pharmaceutical companies while there has been a slight improvement in Overseas earnings during the quarter.
Though the overall declining trend in m3’s earnings has eased, we expect the earnings growth to remain weak. ELAN’s margins have continued to deteriorate.


M3: ELAN Acquisition Drives Top Line Growth; Earnings Growth to Remain Weak

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

Kawasaki Heavy Industries / Equity Bottom-Up

<ul>
<li>Expect continued buying in defense related, as well as banks and life insurance, renewable energy, rails, and medical IT plays with Shigeru Ishiba at the helm. </li>
<li>The Market will be quick to rotate out of names which spiked into Friday's close on expectation for a Sanae Takaichi win in the LDP election.  </li>
<li>Ishiba has been a vocal critic of Abenomics, and his potential policies aimed at higher taxes for investment incomes and capital gains are set to weigh on the Japanese market. </li>
</ul>


Expect continued buying in defense related, as well as banks and life insurance, renewable energy, rails, and medical IT plays with Shigeru Ishiba at the helm. 
The Market will be quick to rotate out of names which spiked into Friday's close on expectation for a Sanae Takaichi win in the LDP election.  
Ishiba has been a vocal critic of Abenomics, and his potential policies aimed at higher taxes for investment incomes and capital gains are set to weigh on the Japanese market. 


Best Outright and Pair Trades for an Ishiba-Led LDP

<ul>
<li>M3’s share price has dropped 18% since its 2Q earnings release. Both revenue and OP fell below consensus and we were surprised by the drop in OPM for 2Q.</li>
<li>Medical Platform’s earnings have continued to decline as a result of spending cuts by pharmaceutical companies while other segments have failed to make up for the decline in Medical Platform.</li>
<li>M3 recently bought a majority stake in ELAN, whose consolidation will dilute m3’s margins. The company’s M&amp;A deals have not brought in any significant contribution to consolidated earnings.</li>
</ul>


M3’s share price has dropped 18% since its 2Q earnings release. Both revenue and OP fell below consensus and we were surprised by the drop in OPM for 2Q.
Medical Platform’s earnings have continued to decline as a result of spending cuts by pharmaceutical companies while other segments have failed to make up for the decline in Medical Platform.
M3 recently bought a majority stake in ELAN, whose consolidation will dilute m3’s margins. The company’s M&amp;A deals have not brought in any significant contribution to consolidated earnings.


M3: Earnings Trend Downward, ELAN Acquisition to Further Dilute Margins

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>Japan's tech market sees major movement with Carlyle's 120% premium bid for Kaonavi, highlighting the stark valuation gap between Japanese and US SaaS companies.</li>
<li>Many Japanese software firms trade at significantly lower multiples (4x) versus US peers (8x), attracting private equity attention.</li>
<li>Japanese stocks ended the week up around 1%. Global macro concerns and inflation lifting bond yields and raising concern over a stronger yen. </li>
</ul>


Japan's tech market sees major movement with Carlyle's 120% premium bid for Kaonavi, highlighting the stark valuation gap between Japanese and US SaaS companies.
Many Japanese software firms trade at significantly lower multiples (4x) versus US peers (8x), attracting private equity attention.
Japanese stocks ended the week up around 1%. Global macro concerns and inflation lifting bond yields and raising concern over a stronger yen. 


Japan Strategy Weekly | Carlyle's Kaonavi Deal Signals a Shift in Japanese Valuations

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Today, the day before the previously extended <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a> Partial Tender Offer for <a href="https://www.smartkarma.com/entities/benefit-one-inc" target="_blank" data-smartkarma-citation="entities:14502:1" rel="noopener">Benefit One Inc (2412 JP)</a> was due to expire, M3 extended it another 20 days.</li>
<li>
<a href="https://www.smartkarma.com/entities/dai-ichi-life-insurance" target="_blank" data-smartkarma-citation="entities:1109:1" rel="noopener">Dai Ichi Life Insurance (8750 JP)</a> several days ago extended their expected start date by weeks - from mid-January to early February. </li>
<li>The wording in the new <a href="https://corporate.m3.com/assets.ctfassets.net/1pwj74siywcy/4uecKStlttjhRmZYyPSB6C/944bc5119e67c0b1780c24aac8936476/Public_E_20240116.pdf" target="_blank" rel="noopener">document</a> from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants. </li>
</ul>


Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.

Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks - from mid-January to early February. 
The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants. 


Japan

M3, Inc. supplies medical information services for doctors through the Internet. The Company also supports marketing of pharmaceutical companies and medical equipment manufacturers.

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M3 Inc (2413 JP)

M3: ELAN Acquisition Drives Top Line Growth; Earnings Growth to Remain Weak

m3's 3Q earnings beat estimates, much of the top line growth came in from the ELAN acquisition. Though the overall declining trend in earnings...

Shifara Samsudeen, FCMA, CGMA

Best Outright and Pair Trades for an Ishiba-Led LDP

How to position in Japanese equities after the surprise win by Shigeru Ishiba over Sanae Takaichi in Friday's LDP election.

Andrew Jackson

M3: Earnings Trend Downward, ELAN Acquisition to Further Dilute Margins

• M3’s share price has dropped more than 18% since its 2Q earnings release. Both revenue and OP fell below consensus and we were surprised by the...

Shifara Samsudeen, FCMA, CGMA

Japan Strategy Weekly | Carlyle's Kaonavi Deal Signals a Shift in Japanese Valuations

Carlyle's bid for Kaonavi underscores valuation gap between Japanese and US SaaS companies, attracting private equity interest. Japanese stocks up...

Mark Chadwick

Benefit One (2412): The Plot Thickens

Dai-Ichi Life extended its "expected Tender launch" by a couple of weeks about 5 days ago. That went past M3's TOB end. BenefitOne asked them to...

Travis Lundy

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M3: ELAN Acquisition Drives Top Line Growth; Earnings Growth to Remain Weak

​m3's 3Q earnings beat estimates, much of the top line growth came in from the ELAN acquisition. Though the overall declining trend in earnings...

Shifara Samsudeen, FCMA, CGMA

Best Outright and Pair Trades for an Ishiba-Led LDP

How to position in Japanese equities after the surprise win by Shigeru Ishiba over Sanae Takaichi in Friday's LDP election.

Andrew Jackson

M3: Earnings Trend Downward, ELAN Acquisition to Further Dilute Margins

• M3’s share price has dropped more than 18% since its 2Q earnings release. Both revenue and OP fell below consensus and we were surprised by the...

Shifara Samsudeen, FCMA, CGMA

Japan Strategy Weekly | Carlyle's Kaonavi Deal Signals a Shift in Japanese Valuations

​Carlyle's bid for Kaonavi underscores valuation gap between Japanese and US SaaS companies, attracting private equity interest. Japanese stocks up...

Mark Chadwick

Benefit One (2412): The Plot Thickens

Dai-Ichi Life extended its "expected Tender launch" by a couple of weeks about 5 days ago. That went past M3's TOB end. BenefitOne asked them to...

Travis Lundy

m3's 3Q earnings beat estimates, much of the top line growth came in from the ELAN acquisition. Though the overall declining trend in earnings...

Carlyle's bid for Kaonavi underscores valuation gap between Japanese and US SaaS companies, attracting private equity interest. Japanese stocks up...