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>M3’s shares have declined 53.2% over the last 12-months to JPY3,566 from JPY7,613 per share. Share price has lost 15% since 4QFY03/2022 earnings in April.</li>
<li>The company’s Medical Platform business was a key beneficiary of pandemic which saw accelerated transformation in pharma marketing.</li>
<li>However, with pandemic conditions easing off, m3’s earnings growth has begun to decelerate and we think there is further downside with weakening of core earnings.</li>
</ul>


M3’s shares have declined 53.2% over the last 12-months to JPY3,566 from JPY7,613 per share. Share price has lost 15% since 4QFY03/2022 earnings in April.
The company’s Medical Platform business was a key beneficiary of pandemic which saw accelerated transformation in pharma marketing.
However, with pandemic conditions easing off, m3’s earnings growth has begun to decelerate and we think there is further downside with weakening of core earnings.


M3: Valuation to Further Drop as Earnings Momentum Slows Down

<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 4QFY03/2022 and full-year FY03/2022 results yesterday. Revenue grew 18.8% YoY to JPY54.0bn (vs consensus JPY51.9bn) while OP dropped 32.2% YoY to JPY10.5bn (vs consensus JPY17.4bn).</li>
<li>OPM for the quarter declined to 19.5% vs 34.1% a year ago while core business, Medical Platform’s revenues declined 0.9% YoY for the first time since 2QFY03/2018.</li>
<li>M3’s shares are down 26.5% YTD and we think there is further downside with weakening of the company’s core earnings.</li>
</ul>



M3 Inc (2413 JP) reported 4QFY03/2022 and full-year FY03/2022 results yesterday. Revenue grew 18.8% YoY to JPY54.0bn (vs consensus JPY51.9bn) while OP dropped 32.2% YoY to JPY10.5bn (vs consensus JPY17.4bn).
OPM for the quarter declined to 19.5% vs 34.1% a year ago while core business, Medical Platform’s revenues declined 0.9% YoY for the first time since 2QFY03/2018.
M3’s shares are down 26.5% YTD and we think there is further downside with weakening of the company’s core earnings.


M3 4Q Results: Underwhelming Earnings and More Room to Fall

<ul>
<li>Medlive’s shares are currently trading at HK$8.15 per share and lost almost 70% YTD which we think was due to the ongoing regulatory crackdown on tech platforms in China.</li>
<li>Medlive's 2021 revenues grew 33.2% YoY to RMB284m while adjusted OP grew 19.0% YoY to RMB123m. Shares reacted negatively due to slowdown in top line growth.</li>
<li>Medlive is currently trading at FY2 EV/Revenue of 0.97x compared to 34.3x when we last wrote. We think shares are extremely cheap and offers a good entry point.</li>
</ul>


Medlive’s shares are currently trading at HK$8.15 per share and lost almost 70% YTD which we think was due to the ongoing regulatory crackdown on tech platforms in China.
Medlive's 2021 revenues grew 33.2% YoY to RMB284m while adjusted OP grew 19.0% YoY to RMB123m. Shares reacted negatively due to slowdown in top line growth.
Medlive is currently trading at FY2 EV/Revenue of 0.97x compared to 34.3x when we last wrote. We think shares are extremely cheap and offers a good entry point.


<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 3QFY03/2022 results on Wednesday. Revenue grew 16.0% YoY to JPY56.5bn (vs consensus JPY54.3bn) while OP grew 22.4% YoY to JPY22.6bn (vs consensus JPY20.6bn).</li>
<li>The company for the first time provided information on its US&amp;EU businesses. Pharma marketing &amp; research generates a majority of revenues followed by clinical trials in these regions.</li>
<li>M3 also has acquired MirVracha, a website providing marketing support services to pharmaceutical companies in Russia. MirVracha has approx. 400k members, around 60% of all physicians in the country.</li>
</ul>



M3 Inc (2413 JP) reported 3QFY03/2022 results on Wednesday. Revenue grew 16.0% YoY to JPY56.5bn (vs consensus JPY54.3bn) while OP grew 22.4% YoY to JPY22.6bn (vs consensus JPY20.6bn).
The company for the first time provided information on its US&amp;EU businesses. Pharma marketing &amp; research generates a majority of revenues followed by clinical trials in these regions.
M3 also has acquired MirVracha, a website providing marketing support services to pharmaceutical companies in Russia. MirVracha has approx. 400k members, around 60% of all physicians in the country.


M3: Covid Related Trials and Vaccination Programs Drive Earnings; Core Business Growth Slowing Down

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

<ul>
<li>In 2020 and 2021 we had nine conviction calls, four of which returned over 50% within just over a year.</li>
<li>Three more returned close to 40%, one returned 15% and just one was an abject failure returning -39%. </li>
<li>On average, alpha generation was 24.3% and our 2022 names are off to a good start putting up 14.7% in alpha in just over a month and a half.</li>
</ul>


In 2020 and 2021 we had nine conviction calls, four of which returned over 50% within just over a year.
Three more returned close to 40%, one returned 15% and just one was an abject failure returning -39%. 
On average, alpha generation was 24.3% and our 2022 names are off to a good start putting up 14.7% in alpha in just over a month and a half.


A Belated Look Back at Our 2020 and 2021 Conviction Calls and a Look Ahead to 2022

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: Valuation to Further Drop as Earnings Momentum Slows Down

M3’s shares have declined 53.2% over the last 12-months. Earnings growth has begun to decelerate with Covid conditions easing off. We think there...

Shifara Samsudeen, FCMA, CGMA

M3 4Q Results: Underwhelming Earnings and More Room to Fall

m3's core business Medical Platform's earnings have started normalising while recovery in other domestic businesses has been driven by Covid-19...

Shifara Samsudeen, FCMA, CGMA

Medlive - High Conviction Update 2022

Medlive is currently trading at a FY2 EV/Revenue of 0.97x and we think Medlive’s shares are extremely cheap at the current valuation and offers a...

Shifara Samsudeen, FCMA, CGMA

A Belated Look Back at Our 2020 and 2021 Conviction Calls and a Look Ahead to 2022

We take a look back at our conviction calls from 2020 and 2021 to assess performance and put the strong start to our 2022 names in context.

Mio Kato

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

M3: Valuation to Further Drop as Earnings Momentum Slows Down

M3’s shares have declined 53.2% over the last 12-months. Earnings growth has begun to decelerate with Covid conditions easing off. We think there...

Shifara Samsudeen, FCMA, CGMA

M3 4Q Results: Underwhelming Earnings and More Room to Fall

m3's core business Medical Platform's earnings have started normalising while recovery in other domestic businesses has been driven by Covid-19...

Shifara Samsudeen, FCMA, CGMA

Medlive - High Conviction Update 2022

Medlive is currently trading at a FY2 EV/Revenue of 0.97x and we think Medlive’s shares are extremely cheap at the current valuation and offers a...

Shifara Samsudeen, FCMA, CGMA

M3: Covid Related Trials and Vaccination Programs Drive Earnings; Core Business Growth Slowing Down

m3's 3QFY03/2022 earnings were driven by Covid-related clinical trials and vaccination projects that will come to an end once pandemic ease off....

Shifara Samsudeen, FCMA, CGMA

A Belated Look Back at Our 2020 and 2021 Conviction Calls and a Look Ahead to 2022

We take a look back at our conviction calls from 2020 and 2021 to assess performance and put the strong start to our 2022 names in context.

Mio Kato