Quality-first, Business-perspective, Long-term, Urbem (HK) Limited

Urbem Capital

Quality-first, Business-perspective, Long-term

Equity Bottom-Up

<ul>
<li>Founder-led Technology One has the capability to earn superior returns on capital while expanding predictably and profitably alongside a massive runaway, in our opinion.</li>
<li>Although the share seems a bit elevated at the moment, we feel that the name should be worth following among long-term, quality-focused investors who can wait patiently.</li>
</ul>


Founder-led Technology One has the capability to earn superior returns on capital while expanding predictably and profitably alongside a massive runaway, in our opinion.
Although the share seems a bit elevated at the moment, we feel that the name should be worth following among long-term, quality-focused investors who can wait patiently.


Technology One: Our Top SaaS Pick From APAC

Japan Specialist

Mark Chadwick

<a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">freee (4478 JP)</a>  provides cloud-based accounting software for small businesses and individuals.  Freee serves over 220,000 clients with an annualized recurring revenue of around $80m.  In the year ended June, revenue grew 53% YoY. There is a huge opportunity to grow in the nascent cloud accounting market in Japan. With a strong and well-incentivised management team, Freee is well placed to build a strong moat around its business. At 68x TTM revenue, the valuation is way up in the clouds.  <section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/165/623/original/Annual-Recurring-Revenue-ARR_chartbuilder.png?1602902386" class="editor-image img-responsive" data-smartkarma-image-id="165623"></figure></section></section>

freee (4478 JP)  provides cloud-based accounting software for small businesses and individuals.  Freee serves over 220,000 clients with an annualized recurring revenue of around $80m.  In the year ended June, revenue grew 53% YoY. There is a huge opportunity to grow in the nascent cloud accounting market in Japan. With a strong and well-incentivised management team, Freee is well placed to build a strong moat around its business. At 68x TTM revenue, the valuation is way up in the clouds.  

Small Cap Growth: Freee (4478) - Counting Clouds

<ul>
<li>
<a href="https://www.smartkarma.com/entities/money-forward-inc" target="_blank" data-smartkarma-citation="entities:25919:1" rel="noopener">Money Forward (3994 JP)</a> provides online accounting software for Japan's SMEs, providing all of the time-saving tools that small business owners need to grow. It is the Japanese version of <a href="https://www.smartkarma.com/entities/xero-ltd" target="_blank" data-smartkarma-citation="entities:390:1" rel="noopener">Xero Ltd (XRO AU)</a> or Quickbooks by <a href="https://www.smartkarma.com/entities/intuit-inc" target="_blank" data-smartkarma-citation="entities:8235:1" rel="noopener">Intuit Inc (INTU US)</a> </li>
<li>Money Forward (MF) and its domestic peer <a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">freee (4478 JP)</a> dominate the Japanese online market, which is growing in the region of 60-70% YoY.</li>
<li>There is a huge addressable market with low online penetration. MF has the potential to build a strong competitive moat, in the absence of the global majors.</li>
<li>Today, MF looks similar to Xero in 2013. If MF follows the same growth trajectory, investors could be looking at a 9-bagger.  </li>
</ul>



Money Forward (3994 JP) provides online accounting software for Japan's SMEs, providing all of the time-saving tools that small business owners need to grow. It is the Japanese version of Xero Ltd (XRO AU) or Quickbooks by Intuit Inc (INTU US) 
Money Forward (MF) and its domestic peer freee (4478 JP) dominate the Japanese online market, which is growing in the region of 60-70% YoY.
There is a huge addressable market with low online penetration. MF has the potential to build a strong competitive moat, in the absence of the global majors.
Today, MF looks similar to Xero in 2013. If MF follows the same growth trajectory, investors could be looking at a 9-bagger.  


Small Cap Growth: Money Forward (3994) - Be Audit You Can Be

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.

In my previous insight <a href="https://www.smartkarma.com/insights/xero-a-beautiful-business-but-not-pricing-in-much-in-the-way-of-an-sme-rout" target="_blank" rel="noopener">XERO: A Beautiful Business but Not Pricing in Much in the Way of an SME Rout,</a> I mentioned that  XRO mostly caters to small business owners in Australia, NZ, and UK, along with other geographies. With the COVID-19 ravaging small and medium enterprises (SMEs) across its main markets, its questionable if the company can deliver on near term growth.  In this insight, I'll take a look at the company's FY20 results (year ending Mar 20) which were reported earlier today.

In my previous insight XERO: A Beautiful Business but Not Pricing in Much in the Way of an SME Rout, I mentioned that  XRO mostly caters to small business owners in Australia, NZ, and UK, along with other geographies. With the COVID-19 ravaging small and medium enterprises (SMEs) across its main markets, its questionable if the company can deliver on near term growth.  In this insight, I'll take a look at the company's FY20 results (year ending Mar 20) which were reported earlier today.

Xero Results Update: Good Results, Tepid Outlook. Earnings Cut Making It Even More Expensive

<a href="https://www.smartkarma.com/entities/xero-ltd" target="_blank" data-smartkarma-citation="entities:390:1" rel="noopener">Xero Ltd (XRO AU)</a> (Mcap: US$6bn, ADV: US$35m) is as its tagline says a "beautiful business". The company is a classic SaaS business offering cloud based accounting. It was set up in New Zealand in 2006 and was listed in 2007, raising a total of NZ$15m. The business is today worth US$6bn. However, XRO mostly caters to small business owners in Australia, NZ, and UK, along with other geographies. With the COVID-19 ravaging small and medium enterprises (SMEs) across its main markets, its questionable if the company can deliver on near term growth.  If the crisis lasts a few months, its growth over the next 2-3 years might be put in question as well.While the recurring revenue will keep the business running, the valuation isn't really factoring in a slowdown.

Xero Ltd (XRO AU) (Mcap: US$6bn, ADV: US$35m) is as its tagline says a "beautiful business". The company is a classic SaaS business offering cloud based accounting. It was set up in New Zealand in 2006 and was listed in 2007, raising a total of NZ$15m. The business is today worth US$6bn. However, XRO mostly caters to small business owners in Australia, NZ, and UK, along with other geographies. With the COVID-19 ravaging small and medium enterprises (SMEs) across its main markets, its questionable if the company can deliver on near term growth.  If the crisis lasts a few months, its growth over the next 2-3 years might be put in question as well.While the recurring revenue will keep the business running, the valuation isn't really factoring in a slowdown.

XERO: A Beautiful Business but Not Pricing in Much in the Way of an SME Rout

United Kingdom

Sage Group is a British multinational enterprise software company that provides integrated business management software solutions and services primarily for small and medium-sized companies. Their offerings include accounting and finance, ERP, payroll, HR, and payment solutions, along with cloud-based services like Sage Business Cloud, Sage Intacct, and Sage X3. The company was founded in Newcastle upon Tyne, England, in 1981.

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Sage Group (SGE LN)

Technology One: Our Top SaaS Pick From APAC

Although the share seems a bit elevated at the moment, we feel that Technology One should be worth following among long-term, quality-focused...

Urbem Capital

Small Cap Growth: Freee (4478) - Counting Clouds

Small Cap Growth: Freee is Japan's number one provider of cloud accounting software. Early stage growth with large TAM. Visionary management team;...

Mark Chadwick

Small Cap Growth: Money Forward (3994) - Be Audit You Can Be

Money Forward (3994 JP) is the Japanese

Mark Chadwick

Xero Results Update: Good Results, Tepid Outlook. Earnings Cut Making It Even More Expensive

In my previous insight XERO: A Beautiful Business but Not Pricing in Much in the Way of an SME Rout, I mentioned that XRO mostly caters to small...

Sumeet Singh

XERO: A Beautiful Business but Not Pricing in Much in the Way of an SME Rout

Xero Ltd (XRO AU) (Mcap: US$6bn, ADV: US$35m) is as its tagline says a "beautiful business". The company is a classic SaaS business offering cloud...

Sumeet Singh

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