Japan Specialist

Mark Chadwick

Equity Bottom-Up

<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

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.

<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/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/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)

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.

<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 2QFY06/2022 earnings today. Revenue grew 38.5% YoY to JPY3.31bn, marginally below consensus revenue of JPY3.47bn.</li>
<li>Operating losses for the quarter was JPY544m (16.4% of revenues vs 17.8% in 2QFY06/2021) which was well below consensus operating loss of JPY673.1 (19.4% of consensus revenue.</li>
<li>Though revenues fell slightly below consensus, we think 2Q results have eased some of the concerns we had over freee’s acquisition of Ninja Sign and its path to profits.</li>
</ul>



freee (4478 JP) reported 2QFY06/2022 earnings today. Revenue grew 38.5% YoY to JPY3.31bn, marginally below consensus revenue of JPY3.47bn.
Operating losses for the quarter was JPY544m (16.4% of revenues vs 17.8% in 2QFY06/2021) which was well below consensus operating loss of JPY673.1 (19.4% of consensus revenue.
Though revenues fell slightly below consensus, we think 2Q results have eased some of the concerns we had over freee’s acquisition of Ninja Sign and its path to profits.


Freee 2Q: OP Beat Wipes Out Concerns on Mid/Large User Growth and Profitability

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) - 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

Freee 2Q: OP Beat Wipes Out Concerns on Mid/Large User Growth and Profitability

Freee’s share price started falling as earnings over the last 2-3 quarters concerned investors over its path to profits. 2Q OP beat has eased these...

Shifara Samsudeen, FCMA, CGMA

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