Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Today, <a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Group (4755 JP)</a> announced it would propose an amendment to its Articles at the AGM (28 March) to issue "Bond-Type Class Shares."   First reaction: You wot, mate?</li>
<li>The company states it wants to <em>"strengthen its financial base through reducing interesting-bearing debt by equity-related financings and conduct proactive control of debt maturity schedule, etc."</em>
</li>
<li>Now it wants to issue listed bond-type shares. Dividends not interest. The last Japanese issuer of something similar was NEC in 2001. Few will remember, so we study the situation.</li>
</ul>


Today, Rakuten Group (4755 JP) announced it would propose an amendment to its Articles at the AGM (28 March) to issue "Bond-Type Class Shares."   First reaction: You wot, mate?
The company states it wants to "strengthen its financial base through reducing interesting-bearing debt by equity-related financings and conduct proactive control of debt maturity schedule, etc."

Now it wants to issue listed bond-type shares. Dividends not interest. The last Japanese issuer of something similar was NEC in 2001. Few will remember, so we study the situation.


Rakuten's New "Bond-Type Share" Issuance - Quite Quirky to Quantulate Rakuten's Quisquous New Quoz

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>
<a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Group (4755 JP)</a>'s shares plummeted 80% in 8 years, reaching ¥500 in June 2023 due to ¥1.3 trillion mobile business losses.</li>
<li>Expecting a positive shift as Rakuten Mobile approaches platinum band access and subscribers poised for exponential growth following the KDDI agreement.</li>
<li>We are expecting Rakuten Mobile to turn profitable next year, while the consensus is projecting an operating loss of around ¥200bn for the business.</li>
</ul>



Rakuten Group (4755 JP)'s shares plummeted 80% in 8 years, reaching ¥500 in June 2023 due to ¥1.3 trillion mobile business losses.
Expecting a positive shift as Rakuten Mobile approaches platinum band access and subscribers poised for exponential growth following the KDDI agreement.
We are expecting Rakuten Mobile to turn profitable next year, while the consensus is projecting an operating loss of around ¥200bn for the business.


Rakuten Mobile Could Be Churning Profits Next Year

<ul>
<li>Last Friday, the FFW changes for the TOPIX July Free Float Weight Review were announced. There have also been other recent announcements creating flows on 30 July.</li>
<li>Some of these other recent announcements represent a possible change in <em>ad hoc</em> methodology.</li>
<li>Total Flow for 30 July is ~$3.3bn a side driven by selling flows (3/4 of the buy flows are reverse funding). $2.1bn of selling is &gt; 3 days ADV.</li>
</ul>


Last Friday, the FFW changes for the TOPIX July Free Float Weight Review were announced. There have also been other recent announcements creating flows on 30 July.
Some of these other recent announcements represent a possible change in ad hoc methodology.
Total Flow for 30 July is ~$3.3bn a side driven by selling flows (3/4 of the buy flows are reverse funding). $2.1bn of selling is &gt; 3 days ADV.


July TOPIX FFW Rebal - Bigger Than Expected

Equity Capital Markets

<ul>
<li>Yesterday, <a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Group (4755 JP)</a> announced that its consolidated subsidiary, Rakuten Securities, has applied for a listing on the Tokyo Stock Exchange.</li>
<li>Rakuten Securities has long-term growth potential through leveraging Rakuten's ecosystem for steady securities account growth and exploring cross-selling opportunities for related services.</li>
<li>While the business seems promising, there may be concerns regarding its valuation, given its previous high trailing PE of 43.0x.</li>
</ul>


Yesterday, Rakuten Group (4755 JP) announced that its consolidated subsidiary, Rakuten Securities, has applied for a listing on the Tokyo Stock Exchange.
Rakuten Securities has long-term growth potential through leveraging Rakuten's ecosystem for steady securities account growth and exploring cross-selling opportunities for related services.
While the business seems promising, there may be concerns regarding its valuation, given its previous high trailing PE of 43.0x.


Rakuten Securities IPO: Promising Business with Valuation Caveats

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

<ul>
<li>Loyalty points offer a significant incentive for consumers when deciding where to buy and many surveys confirm that points are a key factor in selection of online store.  </li>
<li>With inflation biting, the big loyalty programmes are promoting points as a way to save on future purchases.</li>
<li>Rakuten is by far the largest provider (10 pts above anyone else) and is enjoying strong growth – which could help adoption of its mobile store.</li>
</ul>


Loyalty points offer a significant incentive for consumers when deciding where to buy and many surveys confirm that points are a key factor in selection of online store.  
With inflation biting, the big loyalty programmes are promoting points as a way to save on future purchases.
Rakuten is by far the largest provider (10 pts above anyone else) and is enjoying strong growth – which could help adoption of its mobile store.


Japan

Rakuten Group, Inc. provides Internet services. The Company offers Internet finance services which including "Rakuten Card" and "Rakuten Bank". Rakuten Group also provides digital content services including electronic book services.

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Rakuten (4755 JP)

Rakuten Mobile Could Be Churning Profits Next Year

Rakuten shares fell 80% due to ¥1.3tn Mobile losses. Expecting growth with platinum band access and KDDI aggrement. Anticipate Mobile profitability...

Oshadhi Kumarasiri

July TOPIX FFW Rebal - Bigger Than Expected

The TOPIX July FFW Review is more interesting than it would appear at first glance. There are some trades to do too. Watch Rakuten, Nippon Paint,...

Travis Lundy

Rakuten Securities IPO: Promising Business with Valuation Caveats

Rakuten Securities has long-term growth potential through leveraging Rakuten's ecosystem for steady securities account growth and exploring cross...

Oshadhi Kumarasiri

Rakuten: 17% More Points in 2022

Rakuten;s biggest strength in e-commerce and the wider digital ecosystem is its popular loyalty points programme. Rivals are circling but Rakuten...

Michael Causton

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Rakuten's New "Bond-Type Share" Issuance - Quite Quirky to Quantulate Rakuten's Quisquous New Quoz

Rakuten (4755) today announced they would seek shareholder approval to issue "Bond-Type Shares". MILES better than Toyota's AA Shares. But odd....

Travis Lundy

Rakuten Mobile Could Be Churning Profits Next Year

Rakuten shares fell 80% due to ¥1.3tn Mobile losses. Expecting growth with platinum band access and KDDI aggrement. Anticipate Mobile profitability...

Oshadhi Kumarasiri

July TOPIX FFW Rebal - Bigger Than Expected

The TOPIX July FFW Review is more interesting than it would appear at first glance. There are some trades to do too. Watch Rakuten, Nippon Paint,...

Travis Lundy

Rakuten Securities IPO: Promising Business with Valuation Caveats

Rakuten Securities has long-term growth potential through leveraging Rakuten's ecosystem for steady securities account growth and exploring cross...

Oshadhi Kumarasiri

Rakuten: 17% More Points in 2022

Rakuten;s biggest strength in e-commerce and the wider digital ecosystem is its popular loyalty points programme. Rivals are circling but Rakuten...

Michael Causton