Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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>Safie’s 1Q results disappointed the market as revenue came in 5% lower than the average of two consensus estimates and R&amp;D expense surged. </li>
<li>Nevertheless, 1Q should be the worst quarter of the year as downside from the specific distributor issue is now quantifiable and the stock is now on 2.5x 2022 EV/Sales. </li>
<li>Valuations are already highly compelling and if the sentiment driven sell off continues we would be looking for 5-10x returns over a 3-4 year timeframe.</li>
</ul>


Safie’s 1Q results disappointed the market as revenue came in 5% lower than the average of two consensus estimates and R&amp;D expense surged. 
Nevertheless, 1Q should be the worst quarter of the year as downside from the specific distributor issue is now quantifiable and the stock is now on 2.5x 2022 EV/Sales. 
Valuations are already highly compelling and if the sentiment driven sell off continues we would be looking for 5-10x returns over a 3-4 year timeframe.


Safie – Cost Overshoot Could Drive This Lower But…

<ul>
<li>Safie reported 2021 results on Monday and beat slightly with revenue 1.6% above guidance and an operating loss of ¥76m, better than guidance of a ¥225m loss. </li>
<li>The stock is rated neutral by the sell side despite offering perhaps the best growth prospects in Japan and demonstrating numerous signs of exceptional management.</li>
<li>We consider the name to be potentially Japan’s best growth story in the small cap space.</li>
</ul>


Safie reported 2021 results on Monday and beat slightly with revenue 1.6% above guidance and an operating loss of ¥76m, better than guidance of a ¥225m loss. 
The stock is rated neutral by the sell side despite offering perhaps the best growth prospects in Japan and demonstrating numerous signs of exceptional management.
We consider the name to be potentially Japan’s best growth story in the small cap space.


Safie – Baby Thrown Out With the Bathwater Number Two

Equity Capital Markets

<ul>
<li>ExaWizards’ financial disclosures and track record are relatively limited making it difficult to create high-confidence forecasts. </li>
<li>However, what little information there is points to explosive growth potential. </li>
<li>Whether that potential will be realised is a question but our analysis suggests that the company’s execution potential is good.</li>
</ul>


ExaWizards’ financial disclosures and track record are relatively limited making it difficult to create high-confidence forecasts. 
However, what little information there is points to explosive growth potential. 
Whether that potential will be realised is a question but our analysis suggests that the company’s execution potential is good.


ExaWizards IPO – Latent Potential Abound

<ul>
<li>Safie has fallen almost 20% since announcing results despite revising up revenue guidance by 3.8%. </li>
<li>This is due to revelations that a lone distribution partner had been heavily incentivising the sale of its cameras and return rates had been climbing. </li>
<li>While this does cast a shadow on previous growth trends a careful analysis suggests that it is not a grave concern.</li>
</ul>


Safie has fallen almost 20% since announcing results despite revising up revenue guidance by 3.8%. 
This is due to revelations that a lone distribution partner had been heavily incentivising the sale of its cameras and return rates had been climbing. 
While this does cast a shadow on previous growth trends a careful analysis suggests that it is not a grave concern.


Safie – Overreaction to Specific Distributor Issue

<p>Safie opened up 37.9% and is now trading at around ¥3,500 (+44% vs. the IPO price) putting it moderately above the +28% that we suggested would be a very weak reception for a company of this calibre. With the company threatening to grow at a triple digit pace but with elevated multiples, it is difficult to narrow down fair value, but we suspect that there is a lot of upside left.</p>

Safie opened up 37.9% and is now trading at around ¥3,500 (+44% vs. the IPO price) putting it moderately above the +28% that we suggested would be a very weak reception for a company of this calibre. With the company threatening to grow at a triple digit pace but with elevated multiples, it is difficult to narrow down fair value, but we suspect that there is a lot of upside left.

Safie IPO – First Day Trading – Stay Safie

Japan

Safie Inc. develops application products. The Company develops and operates cloud based video recording platform "Safie" and others. Safie provides its services throughout Japan.

Safie (4375 JP)

Safie – Cost Overshoot Could Drive This Lower But…

Safie's 1Q results disappointed on weak one-off revenues and surging R&D cost but the specific distributor problems are easing and we would be...

Mio Kato

Safie – Baby Thrown Out With the Bathwater Number Two

Safie reported 2021 results on Monday and beat slightly with revenue 1.6% above guidance. We consider the name to be potentially Japan’s best...

Mio Kato

ExaWizards IPO – Latent Potential Abound

What little information ExaWizards has disclosed points to explosive growth potential and although the margin of error is large, our analysis...

Mio Kato

Safie – Overreaction to Specific Distributor Issue

Safie has fallen 20% since announcing results due to revelations that a lone distribution partner had been heavily incentivising sales but a...

Mio Kato

Safie IPO – First Day Trading – Stay Safie

With Safie threatening to grow at a triple digit pace but at elevated multiples, it is difficult to narrow down fair value for the stock, yet we...

Mio Kato