Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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>Among many e-commerce names, <a href="https://www.smartkarma.com/entities/monotaro-co-ltd" target="_blank" data-smartkarma-citation="entities:15441:1" rel="noopener">MonotaRO Co Ltd (3064 JP)</a> is one of the most promising with operating profitability predicted to improve by 200 bps to 14.0% by 2023.</li>
<li>Unlike many e-commerce players, the company doesn’t strain itself financially while pursuing revenue growth through expansion.</li>
<li>At 35.8x OP, MonotaRo is not cheap to be outright bullish. However, it is a reasonable long hedge to allow you to short a lot of other names in e-commerce.</li>
</ul>


Among many e-commerce names, MonotaRO Co Ltd (3064 JP) is one of the most promising with operating profitability predicted to improve by 200 bps to 14.0% by 2023.
Unlike many e-commerce players, the company doesn’t strain itself financially while pursuing revenue growth through expansion.
At 35.8x OP, MonotaRo is not cheap to be outright bullish. However, it is a reasonable long hedge to allow you to short a lot of other names in e-commerce.


Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

<ul>
<li>Results fell short of plan in the nine months to September. It looks like the company will miss FY Dec-21 sales and profit guidance by about 3%. </li>
<li>Sales growth is likely to remain high while margins remain under pressure.</li>
<li>If 20% sales growth can be maintained and margins stabilize, the P/E ratio could drop from more than 60x now to 40x over the next 3 years.</li>
</ul>


Results fell short of plan in the nine months to September. It looks like the company will miss FY Dec-21 sales and profit guidance by about 3%. 
Sales growth is likely to remain high while margins remain under pressure.
If 20% sales growth can be maintained and margins stabilize, the P/E ratio could drop from more than 60x now to 40x over the next 3 years.


MonotaRO (3064 JP): Falling Short of Guidance, Interview Takeaways Mixed

Shifara Samsudeen, FCMA, CGMA

<a href="https://www.smartkarma.com/entities/shift-inc" target="_blank" data-smartkarma-citation="entities:7266:1" rel="noopener">Shift Inc (3697 JP)</a> reported its 4QFY08/2021 and full-year FY08/2021 results on Tuesday (12th October) which saw revenues growing 60.2% YoY to JPY46.0bn from JPY28.7bn in FY08/2020. The operating profit for the year grew 69.8% YoY to JPY4.0bn vs JPY2.4bn in the previous year. Both reported revenue and OP beat Shift’s guidance by 2.2% and 17.5% respectively while revenue and OP beat consensus estimates by 0.4% and 4.5% respectively.The company’s share price rose 10.0% at the end of Wednesday’s close following the company’s strong FY08/2021 earnings.We discuss the details below.

Shift Inc (3697 JP) reported its 4QFY08/2021 and full-year FY08/2021 results on Tuesday (12th October) which saw revenues growing 60.2% YoY to JPY46.0bn from JPY28.7bn in FY08/2020. The operating profit for the year grew 69.8% YoY to JPY4.0bn vs JPY2.4bn in the previous year. Both reported revenue and OP beat Shift’s guidance by 2.2% and 17.5% respectively while revenue and OP beat consensus estimates by 0.4% and 4.5% respectively.The company’s share price rose 10.0% at the end of Wednesday’s close following the company’s strong FY08/2021 earnings.We discuss the details below.

Shift 4Q: Growth Story Is Getting Stronger

BayCurrent Consulting  / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/baycurrent-consulting-inc" target="_blank" data-smartkarma-citation="entities:25985:1" rel="noopener">Baycurrent Consulting (6532 JP)</a>  offers a range of consultancy services in Japan including development and formulation of business strategy, digital transformation, M&amp;A and JV, improvement in operational capabilities and IT Services. The Covid-19 outbreak has accelerated the digital transformation in Japan which has led to increased requirements for consulting services in the country.BayCurrent’s share price has rallied almost 200% over the last 12-months to JPY46,250 per share from JPY15,740 per share a year ago. In this insight, we examine the company’s business model, key drivers, outlook, financials and valuation.

Baycurrent Consulting (6532 JP)  offers a range of consultancy services in Japan including development and formulation of business strategy, digital transformation, M&amp;A and JV, improvement in operational capabilities and IT Services. The Covid-19 outbreak has accelerated the digital transformation in Japan which has led to increased requirements for consulting services in the country.BayCurrent’s share price has rallied almost 200% over the last 12-months to JPY46,250 per share from JPY15,740 per share a year ago. In this insight, we examine the company’s business model, key drivers, outlook, financials and valuation.

Baycurrent Consulting: Strong Fundamentals; Up Almost 200% and Further Upside Likely

<a href="https://www.smartkarma.com/entities/shift-inc" target="_blank" data-smartkarma-citation="entities:7266:1" rel="noopener">Shift Inc (3697 JP)</a> offers outsourced software quality assurance and testing solutions to customers in the enterprise and entertainment markets in Japan. Shift is the market leader in the outsourced software testing service market in Japan with an estimated market share of 70%. The software testing market in Japan is estimated at JPY5.5 trn, however, only 1.0% of the market is currently outsourced while majority of software testing is carried out by in-house engineers at software development companies.The company’s shares have rallied more than 80.0% since March this year significantly outperforming the market. In this insight, we examine Shift’s business model, segments, financials, management, outlook and valuation.

Shift Inc (3697 JP) offers outsourced software quality assurance and testing solutions to customers in the enterprise and entertainment markets in Japan. Shift is the market leader in the outsourced software testing service market in Japan with an estimated market share of 70%. The software testing market in Japan is estimated at JPY5.5 trn, however, only 1.0% of the market is currently outsourced while majority of software testing is carried out by in-house engineers at software development companies.The company’s shares have rallied more than 80.0% since March this year significantly outperforming the market. In this insight, we examine Shift’s business model, segments, financials, management, outlook and valuation.

Shift Inc: Key Beneficiary of Shift in Software Testing Towards Outsourcing in Japan

Japan

MonotaRO Co., Ltd. mainly sells machine tools, engine parts, and factory consumable goods on the web site.

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MonotaRO Co Ltd (3064 JP)

MonotaRo: A Rare Winner in E-Commerce

While most e-commerce players are fighting each other and the e-commerce arms of traditional businesses, MonotaRo operates in a niche with very...

Oshadhi Kumarasiri

MonotaRO (3064 JP): Falling Short of Guidance, Interview Takeaways Mixed

Falling short of guidance, but has been for two quarters. Sales rising at double-digit rates, but margin expansion unlikely. Not cheap at more than...

Scott Foster

Shift 4Q: Growth Story Is Getting Stronger

Shift reported FY08/2021 results which saw revenues growing 60.2% YoY to JPY46.0bn from JPY28.7bn a year ago. Both revenue and OP beat its own...

Shifara Samsudeen, FCMA, CGMA

Baycurrent Consulting: Strong Fundamentals; Up Almost 200% and Further Upside Likely

BayCurrent offers consultancy services in Japan and stock price has been up almost 200% over the last 12-months. Covid-19 has accelerated DX in...

Shifara Samsudeen, FCMA, CGMA

Shift Inc: Key Beneficiary of Shift in Software Testing Towards Outsourcing in Japan

There is no evidence that Shift’s revenue growth is decelerating and as per consensus estimates, Shift’s revenues will hit JPY100bn by the end of...

Shifara Samsudeen, FCMA, CGMA

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