Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>The sell-side analyst community seems anchored to the view that Mercari is a growth stock</li>
<li>Analysts seem reluctant to turn negative on the name despite taking a large knife to earnings estimates</li>
<li>We repeat our view that the company faces a challenging couple of years and that the stock is still significantly overvalued</li>
</ul>


The sell-side analyst community seems anchored to the view that Mercari is a growth stock
Analysts seem reluctant to turn negative on the name despite taking a large knife to earnings estimates
We repeat our view that the company faces a challenging couple of years and that the stock is still significantly overvalued


Mercari (4385) | Analysts Anchored to Outdated Views

Thematic (Sector/Industry)

<ul>
<li>The Nikkei was up +2.15% over the past week (-2% YTD): the yen was 1.2% weaker at ¥142/$</li>
<li>The news was focused on the sharp drop in the yen with even the BoJ Governor Kuroda noting some undesirable effects</li>
<li>The proportion of female directors rose to 9%, a slight increase over 7.4% in the previous year</li>
</ul>


The Nikkei was up +2.15% over the past week (-2% YTD): the yen was 1.2% weaker at ¥142/$
The news was focused on the sharp drop in the yen with even the BoJ Governor Kuroda noting some undesirable effects
The proportion of female directors rose to 9%, a slight increase over 7.4% in the previous year


Japan Weekly | Renova, Mitsubishi Motors, Mercari

Telco/Internet specialist

Kirk Boodry

Redex Research

<ul>
<li>Within our coverage, NTT and Softbank Group are the main beneficiaries of a stronger dollar. NTT benefits operationally as it generates c. $18-20bn in overseas revenue</li>
<li>Softbank benefits in valuation terms as c. 90% of the portfolio is dollar-linked. The forex move from ¥115 to ¥144 boosts asset value by ¥2.4trn or  ¥1,500/share (net)</li>
<li>ECommerce play Mercari gets 30% of revenue from the US but that segment is losing money and a stronger dollar expands that on a yen P&amp;L</li>
</ul>


Within our coverage, NTT and Softbank Group are the main beneficiaries of a stronger dollar. NTT benefits operationally as it generates c. $18-20bn in overseas revenue
Softbank benefits in valuation terms as c. 90% of the portfolio is dollar-linked. The forex move from ¥115 to ¥144 boosts asset value by ¥2.4trn or  ¥1,500/share (net)
ECommerce play Mercari gets 30% of revenue from the US but that segment is losing money and a stronger dollar expands that on a yen P&amp;L


Japan Telecoms - Strong Dollar a Boon for NTT and Softbank Group, Bad for Mercari

<ul>
<li>Mercari reported full year operating loss of ¥3.7b on sales of ¥147b, while providing no guidance for the coming year </li>
<li>We remain most concerned about the US business, where GMV is declining and losses look entrenched </li>
<li>Mercari JP is also clearly slowing, partly due to post-Covid, but also due to rising competition  </li>
</ul>


Mercari reported full year operating loss of ¥3.7b on sales of ¥147b, while providing no guidance for the coming year 
We remain most concerned about the US business, where GMV is declining and losses look entrenched 
Mercari JP is also clearly slowing, partly due to post-Covid, but also due to rising competition  


Mercari (4385) | No Path to Profitability

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

<ul>
<li>Zozo recorded its highest profit ever last year, countering the sceptics once again. </li>
<li>The company has shrugged off the uncertainties surrounding the departure of its founder and, while sticking to its core values, is looking for new growth beyond fashion e-commerce.</li>
<li>While there are some headwinds, Zozo has a solid set of strategies in place to offset these and find new growth streams.</li>
</ul>


Zozo recorded its highest profit ever last year, countering the sceptics once again. 
The company has shrugged off the uncertainties surrounding the departure of its founder and, while sticking to its core values, is looking for new growth beyond fashion e-commerce.
While there are some headwinds, Zozo has a solid set of strategies in place to offset these and find new growth streams.


Zozo: Social Fashion Commerce, Omnichannel and New Ventures

Japan

Mercari, Inc. operates as an electronic commercial company. The Company offers electronic commercial software, operation management, marketing planning, and other marketplace services. Mercari serves customers worldwide.

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Mercari (4385 JP)

Mercari (4385) | Analysts Anchored to Outdated Views

The analyst community remains too bullish on Mercari. We have a consensus Bearish view and see up to 40% downside from the stock.

Mark Chadwick

Japan Weekly | Renova, Mitsubishi Motors, Mercari

We take a look at the stocks that have performed well or poorly over the past week in the Japanese equity market. This week Renova was the star...

Mark Chadwick

Japan Telecoms - Strong Dollar a Boon for NTT and Softbank Group, Bad for Mercari

We have discussed strong dollar beneficiaries before but thought it worth revisiting with the dollar at a 24-year high. In short: better NTT...

Kirk Boodry

Mercari (4385) | No Path to Profitability

Mercari's domestic marketplace growth is clearly slowing. The US looks a long way from profitability and is also losing customer traction. The...

Mark Chadwick

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52-week Range

Market Cap (USDm)

P/E

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Mercari (4385) | Analysts Anchored to Outdated Views

The analyst community remains too bullish on Mercari. We have a consensus Bearish view and see up to 40% downside from the stock.

Mark Chadwick

Japan Weekly | Renova, Mitsubishi Motors, Mercari

We take a look at the stocks that have performed well or poorly over the past week in the Japanese equity market. This week Renova was the star...

Mark Chadwick

Japan Telecoms - Strong Dollar a Boon for NTT and Softbank Group, Bad for Mercari

We have discussed strong dollar beneficiaries before but thought it worth revisiting with the dollar at a 24-year high. In short: better NTT...

Kirk Boodry

Mercari (4385) | No Path to Profitability

Mercari's domestic marketplace growth is clearly slowing. The US looks a long way from profitability and is also losing customer traction. The...

Mark Chadwick

Zozo: Social Fashion Commerce, Omnichannel and New Ventures

Zozo continues to confound sceptics. Despite slowing e-commerce growth post-Covid, Zozo has solid strategies in place to continue to expand and...

Michael Causton