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 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

<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.


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: 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

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

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52-week Range

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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

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