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 4QFY03/2023 results on Friday. Both revenue and OP increased 3.1% and 52.0% YoY to ¥55.7bn (vs consensus ¥60.8bn) and ¥16.0bn (vs consensus ¥17.8bn) respectively.</li>
<li>We previously raised concerns over slowdown in medical platform earnings, and it seems that m3 has not been able to generate meaningful growth from its overseas businesses.</li>
<li>The company expects FY03/2024E revenue growth to further drop to about 8.3% marking the slowest annual increase in revenue over the last two decades.</li>
</ul>



M3 Inc (2413 JP)  reported 4QFY03/2023 results on Friday. Both revenue and OP increased 3.1% and 52.0% YoY to ¥55.7bn (vs consensus ¥60.8bn) and ¥16.0bn (vs consensus ¥17.8bn) respectively.
We previously raised concerns over slowdown in medical platform earnings, and it seems that m3 has not been able to generate meaningful growth from its overseas businesses.
The company expects FY03/2024E revenue growth to further drop to about 8.3% marking the slowest annual increase in revenue over the last two decades.


M3: Guidance Points to Further Slowdown in Growth

<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 3QFY03/2023 earnings today. Revenue increased 12.6% YoY to JPY64.6bn (vs consensus JPY62.6bn) while OP decreased 3.0% YoY to JPY22.0bn (vs consensus JPY22.8bn).</li>
<li>In line with our expectation, m3 has mentioned that it expects pharma marketing revenues to slow down with pharmaceutical companies cutting down their budgets.</li>
<li>Though m3 has made a large no. of M&amp;A deals to pursue growth, we have not seen extraordinary growth in overseas biz and think there is significant downside risk.</li>
</ul>



M3 Inc (2413 JP) reported 3QFY03/2023 earnings today. Revenue increased 12.6% YoY to JPY64.6bn (vs consensus JPY62.6bn) while OP decreased 3.0% YoY to JPY22.0bn (vs consensus JPY22.8bn).
In line with our expectation, m3 has mentioned that it expects pharma marketing revenues to slow down with pharmaceutical companies cutting down their budgets.
Though m3 has made a large no. of M&amp;A deals to pursue growth, we have not seen extraordinary growth in overseas biz and think there is significant downside risk.


M3: Slow Down in Pharma Marketing a Significant Downside Risk

<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 2QFY03/2023 results yesterday. Revenue grew 10.6% YoY to JPY56.7bn (vs consensus JPY54.7bn) while OP increased 31.5% YoY to JPY17.9bn (vs consensus JPY17.0bn).</li>
<li>The company’s earnings were mainly driven by Covid-19 related trials and a weaker Yen which mainly helped the overseas business post strong results.</li>
<li>M3’s growth prospects remain stagnant and the company’s valuation multiple is still expensive as earnings expectation has started to decline.</li>
</ul>



M3 Inc (2413 JP)  reported 2QFY03/2023 results yesterday. Revenue grew 10.6% YoY to JPY56.7bn (vs consensus JPY54.7bn) while OP increased 31.5% YoY to JPY17.9bn (vs consensus JPY17.0bn).
The company’s earnings were mainly driven by Covid-19 related trials and a weaker Yen which mainly helped the overseas business post strong results.
M3’s growth prospects remain stagnant and the company’s valuation multiple is still expensive as earnings expectation has started to decline.


M3: Covid Related Trials and Yen Depreciation Support Earnings Beat

<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 1QFY03/2023 results yesterday. Revenue grew 22.8% YoY to JPY57.0bn (vs consensus JPY50.8bn) while OP decreased 24.2% YoY to JPY19.0bn (vs consensus JPY16.3bn).</li>
<li>The decline in OP was due to decrease in profit from overseas business where 1QFY03/2022 benefited from the Medlive IPO.</li>
<li>Though m3’s earnings have beaten consensus and the company’s core Medical Platform has seen some recovery in earnings, we would not be rushing to make an entry.</li>
</ul>



M3 Inc (2413 JP)  reported 1QFY03/2023 results yesterday. Revenue grew 22.8% YoY to JPY57.0bn (vs consensus JPY50.8bn) while OP decreased 24.2% YoY to JPY19.0bn (vs consensus JPY16.3bn).
The decline in OP was due to decrease in profit from overseas business where 1QFY03/2022 benefited from the Medlive IPO.
Though m3’s earnings have beaten consensus and the company’s core Medical Platform has seen some recovery in earnings, we would not be rushing to make an entry.


M3: Revenue and OP Beat Consensus but Don’t Rush to Make an Entry

<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

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: Guidance Points to Further Slowdown in Growth

M3's 4Q earnings were below consensus and guidance for FY03/24E revenue growth is the lowest in more than 2 decades. slowdown in pharma mktg and...

Shifara Samsudeen, FCMA, CGMA

M3: Slow Down in Pharma Marketing a Significant Downside Risk

Decelerating pharma mktg and end of Covid-19 projects pose significant downside risk. Though m3 has no. of other businesses, these are at early...

Shifara Samsudeen, FCMA, CGMA

M3: Revenue and OP Beat Consensus but Don’t Rush to Make an Entry

M3 reported 1QFY03/2023 results yesterday. Both revenue and OP beat consensus estimates and the company's core biz Medical Platform saw some...

Shifara Samsudeen, FCMA, CGMA

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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

M3: Guidance Points to Further Slowdown in Growth

M3's 4Q earnings were below consensus and guidance for FY03/24E revenue growth is the lowest in more than 2 decades. slowdown in pharma mktg and...

Shifara Samsudeen, FCMA, CGMA

M3: Slow Down in Pharma Marketing a Significant Downside Risk

Decelerating pharma mktg and end of Covid-19 projects pose significant downside risk. Though m3 has no. of other businesses, these are at early...

Shifara Samsudeen, FCMA, CGMA

M3: Covid Related Trials and Yen Depreciation Support Earnings Beat

m3's 2Q earnings beat consensus driven by Covid related projects and weaker yen which helped overseas biz post strong results. Medical Platform is...

Shifara Samsudeen, FCMA, CGMA

M3: Revenue and OP Beat Consensus but Don’t Rush to Make an Entry

M3 reported 1QFY03/2023 results yesterday. Both revenue and OP beat consensus estimates and the company's core biz Medical Platform saw some...

Shifara Samsudeen, FCMA, CGMA

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