Research from Mita Securities, Mita Securities

Mita Securities

Research from Mita Securities

Mita Securities provides a full scale diversified investment banking and financial services. A comprehensive investment banking department, specializes in rights offerings advisory, take-over bids agents, M&A etc. Including a proprietary trading desk, and wealth management department that offers brokerage, custody, real estate, and full proxy services.

Equity Bottom-Up

<ul><li>On April 13, Money Forward (3994, the company) announced 1Q (Dec-Feb) FY11/22 sales of 4.756bn yen (+37.2% YoY), EBITDA of -1.159bn yen (vs. 358m yen for 1Q FY11/21)</li><li>Our 1Q earnings forecasts were sales of 4.363bn yen, EBITDA of -2.239bn yen, OP of -2.683bn yen, and SaaS ARR of 12.537bn yen</li><li>SaaS ARR of 12.904bn yen includes 8.727bn yen for Business domain corporate customers (+46.7% YoY), 1.264bn yen for Business domain sole proprietors (+35.0% YoY)</li></ul>

On April 13, Money Forward (3994, the company) announced 1Q (Dec-Feb) FY11/22 sales of 4.756bn yen (+37.2% YoY), EBITDA of -1.159bn yen (vs. 358m yen for 1Q FY11/21)Our 1Q earnings forecasts were sales of 4.363bn yen, EBITDA of -2.239bn yen, OP of -2.683bn yen, and SaaS ARR of 12.537bn yenSaaS ARR of 12.904bn yen includes 8.727bn yen for Business domain corporate customers (+46.7% YoY), 1.264bn yen for Business domain sole proprietors (+35.0% YoY)

Money Forward (3994): 1Q SaaS ARR on Steady Growth, Upfront Investments Lagging

Japan Specialist

Mark Chadwick

<ul>
<li>Q1 results are better than expected, achieving record-high quarterly growth in SaaS revenue</li>
<li>Growth is driven by Corporate Customer ARR, which rose by 47% YoY</li>
<li>For growth investors, Money Forward is out top pick in Japan</li>
</ul>


Q1 results are better than expected, achieving record-high quarterly growth in SaaS revenue
Growth is driven by Corporate Customer ARR, which rose by 47% YoY
For growth investors, Money Forward is out top pick in Japan


Money Forward (3994) - Surprisingly Strong SaaS Sales

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Every year in April there are two TOPIX rebalance changes - the FFW review for July-September FY-end companies, and the annual liquidity factor adjustments.</li>
<li>This year, the former is replaced by the TOPIX FFW Methodology Change for the new Market Structure. This is a big change, but it will not necessarily overwhelm the latter.</li>
<li>
<a href="https://www.smartkarma.com/profiles/janaghan-jeyakumar-cfa" target="_blank" data-smartkarma-citation="accounts:3173" rel="noopener">Janaghan Jeyakumar, CFA</a>'s piece of 5 weeks ago discussing the Liquidity Factor basket has seen generally good performance. There are two days to go. </li>
</ul>


Every year in April there are two TOPIX rebalance changes - the FFW review for July-September FY-end companies, and the annual liquidity factor adjustments.
This year, the former is replaced by the TOPIX FFW Methodology Change for the new Market Structure. This is a big change, but it will not necessarily overwhelm the latter.

Janaghan Jeyakumar, CFA's piece of 5 weeks ago discussing the Liquidity Factor basket has seen generally good performance. There are two days to go. 


The TOPIX Liquidity Factor Adjustment - Still a Trade To Do

<ul><li>Upward revision of sales and profit guidance. A mix of good and bad news</li><li>The company raised its sales guidance by 350m yen and raised its EBITDA and OP guidance by 800m yen.</li><li>The upward revision of sales guidance is due to 1) higher recurring and non-recurring revenue in the Business domain and 2) higher non-recurring revenue in the Finance domain</li></ul>

Upward revision of sales and profit guidance. A mix of good and bad newsThe company raised its sales guidance by 350m yen and raised its EBITDA and OP guidance by 800m yen.The upward revision of sales guidance is due to 1) higher recurring and non-recurring revenue in the Business domain and 2) higher non-recurring revenue in the Finance domain

Money Forward (3994): Announced Upward Revision of 1Q Guidance

Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

<ul>
<li>The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation. </li>
<li>For companies with "low liquidity" the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation. </li>
<li>Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. This situation opens up interesting opportunities for a basket trade. </li>
</ul>


The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation. 
For companies with "low liquidity" the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation. 
Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. This situation opens up interesting opportunities for a basket trade. 


TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)

Japan

Money Forward, Inc. develops mobile application software. The Company produces automatic household account book softwares, household account book application softwares, and other products. Money Forward also provides personal financial management, cloud based accounting solutions, and other services.

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Money Forward (3994 JP)

Money Forward (3994): 1Q SaaS ARR on Steady Growth, Upfront Investments Lagging

On April 13, Money Forward (3994, the company) announced 1Q (Dec-Feb) FY11/22 sales of 4.756bn yen (+37.2% YoY), EBITDA of -1.159bn yen (vs. 358m...

Mita Securities

Money Forward (3994) - Surprisingly Strong SaaS Sales

Money Forward has one of the largest SaaS/Fintech platforms in Japan and is a key beneficiary of corporate digital transformation in Japan.

Mark Chadwick

The TOPIX Liquidity Factor Adjustment - Still a Trade To Do

The TOPIX Liquidity Factor Trade is an esoteric rebalance accompanying the major FFW rebalance to be announced Thursday. The major names have seen...

Travis Lundy

Money Forward (3994): Announced Upward Revision of 1Q Guidance

Upward revision of sales and profit guidance. A mix of good and bad news. The company raised its sales guidance by 350m yen and raised its EBITDA...

Mita Securities

TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)

Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. This situation opens up interesting...

Janaghan Jeyakumar, CFA

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