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/Freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">freee (4478 JP)</a> reported 2QFY06/2023 results today. Revenue increased 35.3% YoY to JPY4,479m (vs consensus JPY4,469.5m) while operating losses for the quarter widened to JPY1,281m (vs consensus JPY1,574.5m).</li>
<li>Both ARPU and no. of paying customers continue to increase and the company’s strategy of onboarding large corporates seems to pay off.</li>
<li>Widening operating loss is no major concern as it is a matter of time before freee cuts down advertising and other costs given the expanding revenue base and excessive GPM.</li>
</ul>



freee (4478 JP) reported 2QFY06/2023 results today. Revenue increased 35.3% YoY to JPY4,479m (vs consensus JPY4,469.5m) while operating losses for the quarter widened to JPY1,281m (vs consensus JPY1,574.5m).
Both ARPU and no. of paying customers continue to increase and the company’s strategy of onboarding large corporates seems to pay off.
Widening operating loss is no major concern as it is a matter of time before freee cuts down advertising and other costs given the expanding revenue base and excessive GPM.


Freee: Widened Losses No Major Concern as Freee Advances Towards Medium/Long Term Growth Strategy

<ul>
<li>
<a href="https://www.smartkarma.com/entities/money-forward-inc" target="_blank" data-smartkarma-citation="entities:25919:1" rel="noopener">Money Forward (3994 JP)</a> reported 4QFY11/2022 results yesterday. Revenue increased 42.5% YoY to JPY6.2bn (vs consensus JPY6.0bn) driven by growth in both MF Business and MF Home.</li>
<li>Operating losses for the quarter widened to JPY2.2bn (34.8% of revenue) from JPY661m (15.2% of revenue) in the same quarter last year (vs consensus JPY2.0bn).</li>
<li>Though MF’s top line continues to grow, we have not yet seen a meaningful improvement in its profitability, and we think, MF’s shares are overvalued compared to its counterpart freee.</li>
</ul>



Money Forward (3994 JP) reported 4QFY11/2022 results yesterday. Revenue increased 42.5% YoY to JPY6.2bn (vs consensus JPY6.0bn) driven by growth in both MF Business and MF Home.
Operating losses for the quarter widened to JPY2.2bn (34.8% of revenue) from JPY661m (15.2% of revenue) in the same quarter last year (vs consensus JPY2.0bn).
Though MF’s top line continues to grow, we have not yet seen a meaningful improvement in its profitability, and we think, MF’s shares are overvalued compared to its counterpart freee.


Money Forward: Top Line Expands, Yet to See Meaningful Turnaround in Profitability

Telco/Internet specialist

Kirk Boodry

Redex Research

<ul>
<li>Q4 revenue growth of 43% was driven by growth in sales to corporates (+54%) on new user growth, customer mix, and upside from cross-selling</li>
<li>EBITDA erosion improved from the peak losses of Q3 and whilst it has not issued full-year FY23 guidance, it says it expects steady improvements as the year goes on</li>
<li>This was a good quarter but we expect that is largely reflected in the share price after a 61% run over the last six months</li>
</ul>


Q4 revenue growth of 43% was driven by growth in sales to corporates (+54%) on new user growth, customer mix, and upside from cross-selling
EBITDA erosion improved from the peak losses of Q3 and whilst it has not issued full-year FY23 guidance, it says it expects steady improvements as the year goes on
This was a good quarter but we expect that is largely reflected in the share price after a 61% run over the last six months


Money Forward - Q4 Results Reaction: Encouraging Signs of User Growth and Monetization

Japan Specialist

Mark Chadwick

<ul>
<li>Money Forward Q4 sales rose +42% YoY to Y6.2bn driven by corporate ARR (+55% YoY)</li>
<li>Full year revenue guidance for FY11/23 is in line with consensus </li>
<li>We still see over 20% upside in the stock if the company hits the top end of revenue guidance</li>
</ul>


Money Forward Q4 sales rose +42% YoY to Y6.2bn driven by corporate ARR (+55% YoY)
Full year revenue guidance for FY11/23 is in line with consensus 
We still see over 20% upside in the stock if the company hits the top end of revenue guidance


Money Forward (3994) | Corporate ARR +55% YoY

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.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/net-protections-holdings-inc" target="_blank" data-smartkarma-citation="entities:35162:1" rel="noopener">Net Protections (7383 JP)</a>, a buy now pay later service provider, raised around US$570m via selling a mix of primary and secondary shares in its Japan IPO in Dec 2021.</li>
<li>As per Yano Research, it had 40% market share in the domestic BNPL market for B2C transactions.</li>
<li>In this note, we will talk about the upcoming lock-up expiry on 9th Dec 2022.</li>
</ul>



Net Protections (7383 JP), a buy now pay later service provider, raised around US$570m via selling a mix of primary and secondary shares in its Japan IPO in Dec 2021.
As per Yano Research, it had 40% market share in the domestic BNPL market for B2C transactions.
In this note, we will talk about the upcoming lock-up expiry on 9th Dec 2022.


Net Protections Holding IPO Lock-Up - PE Owner Is Free to Shed Its Remaining Stake

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)

Freee: Widened Losses No Major Concern as Freee Advances Towards Medium/Long Term Growth Strategy

Widened operating losses was not at all a surprise as the company already mentioned that it will continue to invest on user growth. Growth in large...

Shifara Samsudeen, FCMA, CGMA

Money Forward: Top Line Expands, Yet to See Meaningful Turnaround in Profitability

MF's 4QFY11/22 earnings beat estimates. EBITDA (losses) improved sequentially but we are yet to see steady improvement in profitability. Expects to...

Shifara Samsudeen, FCMA, CGMA

Money Forward - Q4 Results Reaction: Encouraging Signs of User Growth and Monetization

MF posted solid Q4 results with revenue growth at the high end of the range and a sequential improvement in EBITDA losses. FY23 guidance suggests...

Kirk Boodry

Money Forward (3994) | Corporate ARR +55% YoY

We remain bullish on Money Forward given the large TAM, high growth in customer acquisition & revenue, and low churn. Expanding services to appeal...

Mark Chadwick

Net Protections Holding IPO Lock-Up - PE Owner Is Free to Shed Its Remaining Stake

Net Protections, a buy now pay later service provider, raised around US$570m via selling a mix of primary and secondary shares in its Japan IPO in...

Sumeet Singh

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