Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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>Monex results were weak as OP of ¥14.9bn missed consensus estimates for ¥18.4bn in OP. </li>
<li>Gains for DeFi token sales failed to offset continued heavy spending in the US and de-SPAC costs at Coincheck at a time when crypto has been weak. </li>
<li>Despite the negatives, the Japan business continues to form a solid base and arguably almost justifies the entire market cap on its own.</li>
</ul>


Monex results were weak as OP of ¥14.9bn missed consensus estimates for ¥18.4bn in OP. 
Gains for DeFi token sales failed to offset continued heavy spending in the US and de-SPAC costs at Coincheck at a time when crypto has been weak. 
Despite the negatives, the Japan business continues to form a solid base and arguably almost justifies the entire market cap on its own.


Monex – Crypto Business Keeps Weakening But Valuation Discount Excessive

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>In the previous "About the Article on Activist," I mentioned a little about the Monex Group, and will focus on Monex Group again regarding the coverage of the Nikkei article.</li>
<li>Monex Group is generally aligned with its shareholders' objective of sustainable growth in shareholder interest, and Oasis will remain static for the time being to see if stock returns materialize.</li>
<li>Monex also has generally strong board practices, plans its growth policy on a balance between investment in growth and shareholder returns, and is open to communication with investors.</li>
</ul>


In the previous "About the Article on Activist," I mentioned a little about the Monex Group, and will focus on Monex Group again regarding the coverage of the Nikkei article.
Monex Group is generally aligned with its shareholders' objective of sustainable growth in shareholder interest, and Oasis will remain static for the time being to see if stock returns materialize.
Monex also has generally strong board practices, plans its growth policy on a balance between investment in growth and shareholder returns, and is open to communication with investors.


Japan's Governance: About the Article on Monex Group (8698)

Event-Driven

<ul>
<li>Coincheck and Thunder Bridge Capital Partners IV announced today that an SPAC deal would occur to list Coincheck on the NASDAQ. </li>
<li>With a pre-money valuation of $1.25bn the deal values Coincheck noticeably more modestly than Monex’s prior SOTP presentation. </li>
<li>Nevertheless, in combination with the announced TradeStation SPAC it starts to make the extent of Monex’s holdco discount apparent.</li>
</ul>


Coincheck and Thunder Bridge Capital Partners IV announced today that an SPAC deal would occur to list Coincheck on the NASDAQ. 
With a pre-money valuation of $1.25bn the deal values Coincheck noticeably more modestly than Monex’s prior SOTP presentation. 
Nevertheless, in combination with the announced TradeStation SPAC it starts to make the extent of Monex’s holdco discount apparent.


<ul>
<li>Monex missed significantly at the PBT level with results of ¥1.01bn 73% below consensus of ¥3.77bn. </li>
<li>This was a result of weak revenue and margins for the crypto business as advertising expense escalated into falling top line. </li>
<li>The result is unlikely to do anything to reverse the recent downward trend of the stock and we recommend staying hedged.</li>
</ul>


Monex missed significantly at the PBT level with results of ¥1.01bn 73% below consensus of ¥3.77bn. 
This was a result of weak revenue and margins for the crypto business as advertising expense escalated into falling top line. 
The result is unlikely to do anything to reverse the recent downward trend of the stock and we recommend staying hedged.


Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The TSE will move to a new cash equity market structure on 4 April 2022. There will be three new sections: TSE Prime, TSE Standard, and TSE Growth.</li>
<li>The Nikkei Index Team in July 2021 <a href="https://indexes.nikkei.co.jp/nkave/archives/news/20210705E_1.pdf" target="_blank" rel="noopener">announced</a> a change to the Nikkei 225 Average Guidebook language which said constituents had to be members of TSE Prime going forward.  </li>
<li>At least one Nikkei 225 name and possibly two are headed for TSE Standard when the TSE makes its announcement on 11 January 2022. Suggested treatments are discussed.</li>
</ul>


The TSE will move to a new cash equity market structure on 4 April 2022. There will be three new sections: TSE Prime, TSE Standard, and TSE Growth.
The Nikkei Index Team in July 2021 announced a change to the Nikkei 225 Average Guidebook language which said constituents had to be members of TSE Prime going forward.  
At least one Nikkei 225 name and possibly two are headed for TSE Standard when the TSE makes its announcement on 11 January 2022. Suggested treatments are discussed.


Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes

Japan

Monex Group, Inc. is a holding company, which was established through merger between Monex and Nikko Beans. The Company manages its subsidiaries that provides investing services for self-directed investors through Internet and telephone.

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Monex Group Inc (8698 JP)

Monex – Crypto Business Keeps Weakening But Valuation Discount Excessive

Monex results were weak but the stock continues to trade at a an overly large discount to NAV even using relatively conservative assumptions. The...

Mio Kato

Japan's Governance: About the Article on Monex Group (8698)

Regarding the Nikkei article "Monex Subsidiary Coincheck to List on NASDAQ," I would like to focus on the Monex Group, following my previous...

Metrical Inc

Monex – Coincheck SPAC Unlocks Value

Monex continues to improve transparency on the valuations of its subsidiaries with an SPAC for Coincheck valuing the unit at $1.25bn with...

Mio Kato

Monex – Downside Crypto Surprise

Monex missed at the PBT level due to weak revenue and margins for the crypto business. The result is unlikely to reverse the recent downward trend...

Mio Kato

Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes

There is likely to be one Nikkei 225 Change around the end of Q1 2022. There may be more. We will know more on 11 Jan 2022 how many deletions are...

Travis Lundy

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