Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>
Record Margins: Q2 OP surged 82% YoY to ¥7.1b, with Japan profitability up and losses narrowing in Fintech and the US.</li>
<li>
US Breakeven Play: Aggressive cost-cutting led to 12ppt margin improvement; if growth stalls, a sale or exit could boost margins by 200bps.</li>
<li>
Fintech Upside: Losses peaked last year, with 16ppt OPM improvement; breaking even could add 400bps to group margins.</li>
</ul>



Record Margins: Q2 OP surged 82% YoY to ¥7.1b, with Japan profitability up and losses narrowing in Fintech and the US.

US Breakeven Play: Aggressive cost-cutting led to 12ppt margin improvement; if growth stalls, a sale or exit could boost margins by 200bps.

Fintech Upside: Losses peaked last year, with 16ppt OPM improvement; breaking even could add 400bps to group margins.


Mercari (4385) | Profitability on the Rise with More Levers to Pull

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/genda-inc" target="_blank" data-smartkarma-citation="entities:39911:1" rel="noopener">GENDA (9166 JP),</a> along with a selling shareholder, is looking to raise around US$190m to partly fund its M&amp;A.</li>
<li>Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.</li>
<li>In this note, we will talk about the placement and run the deal through our ECM framework.</li>
</ul>



GENDA (9166 JP), along with a selling shareholder, is looking to raise around US$190m to partly fund its M&amp;A.
Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.
In this note, we will talk about the placement and run the deal through our ECM framework.


GENDA Placement - Good Track Record & Sort off Well Flagged but Relatively Large

<ul>
<li>Q4 results were a mixed bag with GMV growth slowing to just 6%. However, costs came in better than expected, boosting margins</li>
<li>Management surprise the market with bullish FY6/25 guidance. Expects GMV growth to accelerate to +10% and sees OP at a healthy 22-25 billion yen</li>
<li>Activist investor Oasis has taken a stake in the company. There is an obvious restructuring angle in addition to significant upside from fintech expansion </li>
</ul>


Q4 results were a mixed bag with GMV growth slowing to just 6%. However, costs came in better than expected, boosting margins
Management surprise the market with bullish FY6/25 guidance. Expects GMV growth to accelerate to +10% and sees OP at a healthy 22-25 billion yen
Activist investor Oasis has taken a stake in the company. There is an obvious restructuring angle in addition to significant upside from fintech expansion 


<ul>
<li>Mercari Q1 FY25: Stock Down 16%; Revenues up +2% y/y, but core OP down -13% y/y</li>
<li>This quarter was a rough one for Mercari’s core Marketplace business. GMV growth slowed to mid-single digits</li>
<li>Fintech segment continues to power ahead. Revenue here jumped +37%, fueled by more customers and higher credit balances.</li>
</ul>


Mercari Q1 FY25: Stock Down 16%; Revenues up +2% y/y, but core OP down -13% y/y
This quarter was a rough one for Mercari’s core Marketplace business. GMV growth slowed to mid-single digits
Fintech segment continues to power ahead. Revenue here jumped +37%, fueled by more customers and higher credit balances.


Mercari (4385) | Q1 FY25 Results: Stock Down 16%

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a> investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.</li>
<li>It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good. </li>
<li>Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.</li>
</ul>



Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good. 
Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.


Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity

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) | Profitability on the Rise with More Levers to Pull

Q2 saw record margins with Japan profitability up and losses narrowing in Fintech and the US; A US exit could lead to further margin improvement,...

Mark Chadwick

GENDA Placement - Good Track Record & Sort off Well Flagged but Relatively Large

GENDA (9166 JP), along with a selling shareholder, is looking to raise around US$190m to partly fund its M&A. In this note, we talk about the deal...

Sumeet Singh

Mercari (4385) | Activist to Add Urgency

Q4 results show slowing GMV growth but better costs, management bullish on FY6/25 guidance, activist investor sees restructuring and fintech upside.

Mark Chadwick

Mercari (4385) | Q1 FY25 Results: Stock Down 16%

Mercari's Q1 FY25 sees stock drop 16% as Marketplace business struggles with slowing growth, while Fintech segment thrives with 37% revenue increase.

Mark Chadwick

Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity

Fast Retailing announced decent earnings for Q3 and upgraded forecasts for August 2023. It also raised its full-year dividend vs previous guidance....

Travis Lundy

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Mercari (4385) | Profitability on the Rise with More Levers to Pull

​Q2 saw record margins with Japan profitability up and losses narrowing in Fintech and the US; A US exit could lead to further margin improvement,...

Mark Chadwick

GENDA Placement - Good Track Record & Sort off Well Flagged but Relatively Large

GENDA (9166 JP), along with a selling shareholder, is looking to raise around US$190m to partly fund its M&A. In this note, we talk about the deal...

Sumeet Singh

Mercari (4385) | Activist to Add Urgency

​Q4 results show slowing GMV growth but better costs, management bullish on FY6/25 guidance, activist investor sees restructuring and fintech upside.

Mark Chadwick

Mercari (4385) | Q1 FY25 Results: Stock Down 16%

​Mercari's Q1 FY25 sees stock drop 16% as Marketplace business struggles with slowing growth, while Fintech segment thrives with 37% revenue increase.

Mark Chadwick

Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity

Fast Retailing announced decent earnings for Q3 and upgraded forecasts for August 2023. It also raised its full-year dividend vs previous guidance....

Travis Lundy

Q2 saw record margins with Japan profitability up and losses narrowing in Fintech and the US; A US exit could lead to further margin improvement,...

Q4 results show slowing GMV growth but better costs, management bullish on FY6/25 guidance, activist investor sees restructuring and fintech upside.

Mercari's Q1 FY25 sees stock drop 16% as Marketplace business struggles with slowing growth, while Fintech segment thrives with 37% revenue increase.