Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<ul>
<li>Mobile losses narrowed sequentially as expected but not by much as the company missed consensus and Redex expectations for profitability</li>
<li>Rakuten also reported a 220K net subscriber loss in the quarter as point-chasing free users churned off when zero-yen tiers were cancelled but worringly, network coverage/capacity was also a factor</li>
<li>If there is a silver lining, fintech businesses Rakuten Bank and Securities posted solid results and remain on pace to IPO but negative mobile sentiment is unlikely to change</li>
</ul>


Mobile losses narrowed sequentially as expected but not by much as the company missed consensus and Redex expectations for profitability
Rakuten also reported a 220K net subscriber loss in the quarter as point-chasing free users churned off when zero-yen tiers were cancelled but worringly, network coverage/capacity was also a factor
If there is a silver lining, fintech businesses Rakuten Bank and Securities posted solid results and remain on pace to IPO but negative mobile sentiment is unlikely to change


Rakuten (Neutral) - Q2 22 Results Reaction: Mobile Losses Narrow but Little Good News Beyond That

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.

Equity Capital Markets

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>Tianqi managed to pull off the largest HK IPO so far this year, a good listing could see a pickup in other large deals.</li>
<li>For placements, SK IE couldn't hold on to its deal price, while Ming Yang kicked off what might be a busy GDR season.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
Tianqi managed to pull off the largest HK IPO so far this year, a good listing could see a pickup in other large deals.
For placements, SK IE couldn't hold on to its deal price, while Ming Yang kicked off what might be a busy GDR season.


ECM Weekly (10th Jul 2022) -Tianqi, Thai Life, TPG, SK IE, Weilong, Emperador, Soosan, SoCar, Deewin

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.

Event-Driven

<ul>
<li>One of Japan’s largest internet companies, <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> applied to list its consolidated subsidiary, <a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (EBANKZ JP)</a> on the Tokyo Stock Exchange on the 4th of July.</li>
<li>With steady customer account growth mostly assured through leveraging Rakuten’s eco-system with more than 36.0m monthly active users, Rakuten Bank is likely to be valued at over ¥500bn.</li>
<li>Thus, we think the Rakuten Bank IPO could change Rakuten’s fortunes and help the share price bounce back from a 10-year low level.</li>
</ul>


One of Japan’s largest internet companies, Rakuten Inc (4755 JP) applied to list its consolidated subsidiary, Rakuten Bank (EBANKZ JP) on the Tokyo Stock Exchange on the 4th of July.
With steady customer account growth mostly assured through leveraging Rakuten’s eco-system with more than 36.0m monthly active users, Rakuten Bank is likely to be valued at over ¥500bn.
Thus, we think the Rakuten Bank IPO could change Rakuten’s fortunes and help the share price bounce back from a 10-year low level.


Rakuten's Fortunes Could Change With The Rakuten Bank IPO

Thematic (Sector/Industry)

<ul>
<li>Japanese Internet companies are testing lows from the 2020 tech selloff whilst Rakuten stands out for reaching levels last seen in 2010</li>
<li>Z Holdings is at a two-year low but has fallen the same distance from its recent high (-53%) </li>
<li>Both face robust competition from Amazon, which has doubled its eCommerce GMV in Japan over the last four years (Rakuten +60%, core Z Holdings +47%)</li>
</ul>


Japanese Internet companies are testing lows from the 2020 tech selloff whilst Rakuten stands out for reaching levels last seen in 2010
Z Holdings is at a two-year low but has fallen the same distance from its recent high (-53%) 
Both face robust competition from Amazon, which has doubled its eCommerce GMV in Japan over the last four years (Rakuten +60%, core Z Holdings +47%)


Japan Internet - Fresh Lows for Many with Rakuten the Lowest Since 2010

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Private Capital Markets

<ul>
<li>Rakuten Bank has grown rapidly to become Japan’s largest online bank with a relatively young demographic focused on city centres, particularly Tokyo. </li>
<li>The COVID pandemic and government initiatives to accelerate Japan’s transition towards a more cashless society have helped drive growth. </li>
<li>However, the key long-term advantage remains its prominent position within the exceptionally strong Rakuten points ecosystem.</li>
</ul>


Rakuten Bank has grown rapidly to become Japan’s largest online bank with a relatively young demographic focused on city centres, particularly Tokyo. 
The COVID pandemic and government initiatives to accelerate Japan’s transition towards a more cashless society have helped drive growth. 
However, the key long-term advantage remains its prominent position within the exceptionally strong Rakuten points ecosystem.


Rakuten Bank – Point Ecosystem Beneficiary

Japan

Rakuten Bank, Ltd. operates as an Internet based bank. The Company provides banking services including deposits, loans, exchange transactions, and other services. Rakuten Bank also provides financial services including investment trusts, securities, credit and cash cards, lottery tickets, and others.

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Rakuten Bank (5838 JP)

Rakuten (Neutral) - Q2 22 Results Reaction: Mobile Losses Narrow but Little Good News Beyond That

Operating losses in mobile improved sequentially as promised but a net loss in subscribers and likely delays to targets for sustainable break-even...

Kirk Boodry

ECM Weekly (10th Jul 2022) -Tianqi, Thai Life, TPG, SK IE, Weilong, Emperador, Soosan, SoCar, Deewin

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

Rakuten's Fortunes Could Change With The Rakuten Bank IPO

The market is generally appreciative of Rakuten when its Internet Services performs and is quick to punish it when the Mobile business fails. The...

Oshadhi Kumarasiri

Japan Internet - Fresh Lows for Many with Rakuten the Lowest Since 2010

Tech sector weakness amplifies concerns on competition for Rakuten and Z Holdings. Both are down 50%+ from recent highs with Rakuten at levels last...

Kirk Boodry

Rakuten Bank – Point Ecosystem Beneficiary

Rakuten Bank has grown rapidly to become Japan’s largest online bank with a relatively young demographic focused on city centres, particularly Tokyo.

Mio Kato

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