Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>San San should benefit from an end to Covid restrictions as employees start to network again, with revenue driven to some extent by the volume of business cards that are digitised</li>
<li>San San remains in the early stages of its growth cycle as corporate Japan embraces digital transformation</li>
<li>Q1 Sales growth +25% YoY, accelerated from 19% YoY the previous quarter</li>
<li>Bill One, a new invoicing platform, is starting to contribute</li>
<li>The stock has run up 52% YTD, one of the top performers among large cap SaaS companies in Japan </li>
<li>Trading at 18x TTM Revenue the stock is cheaper than peers</li>
</ul>


San San should benefit from an end to Covid restrictions as employees start to network again, with revenue driven to some extent by the volume of business cards that are digitised
San San remains in the early stages of its growth cycle as corporate Japan embraces digital transformation
Q1 Sales growth +25% YoY, accelerated from 19% YoY the previous quarter
Bill One, a new invoicing platform, is starting to contribute
The stock has run up 52% YTD, one of the top performers among large cap SaaS companies in Japan 
Trading at 18x TTM Revenue the stock is cheaper than peers


San San (4443) - Networking, Not Net Working

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

In last week's Int'l Compass (Sept. 2), we highlighted emerging markets (EEM-US, Shanghai Comp) and Japan (TOPIX, TOPIX Small) as areas of bullish interest, with short-term bullish inflections suggesting the tide was turning in favor of these markets. This remains the focus in today's report, and especially on Japan; bullish price inflections and breakouts have started to proliferate, which suggests this could be the start of a broad-based rally for Japan in the weeks and months ahead.

In last week's Int'l Compass (Sept. 2), we highlighted emerging markets (EEM-US, Shanghai Comp) and Japan (TOPIX, TOPIX Small) as areas of bullish interest, with short-term bullish inflections suggesting the tide was turning in favor of these markets. This remains the focus in today's report, and especially on Japan; bullish price inflections and breakouts have started to proliferate, which suggests this could be the start of a broad-based rally for Japan in the weeks and months ahead.

Buy Japan On This Breakout ; TOPIX Breaking Out To 21-Year Highs; Actionable Theme: Growth Sectors

Shanghai Stock Exchange Composite Index / Technical Analysis

While there are always exceptions at the individual stock level, MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs of positive change and we recommend adding exposure to emerging markets and Japan.

While there are always exceptions at the individual stock level, MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs of positive change and we recommend adding exposure to emerging markets and Japan.

Buying Opportunities Within Emerging Markets and Japan; US Dollar Failing At 93.50

<a href="https://www.smartkarma.com/entities/sansan-inc" target="_blank" data-smartkarma-citation="entities:28112:1" rel="noopener">Sansan Inc (4443 JP)</a>  has corrected 15% since the company issued a profit warning last week. The final figures have now been released. That is the end of the "bad news." The outlook and guidance for FY5/22 is more upbeat. The company expects sales growth to accelerate from 21% last year to ~26% this year, as the impact from the pandemic fades. Given the increased spend on marketing and personnel, we would expect to see a pick up in the key KPIs, customer acquisition and ARR (annual recurring revenue). The 3 catalysts to BUY the stock: 1) post correction the stock trades at an attractive 13x NTM EV/sales, 2) Key KPIs, customer acquisition and ARR, are recovering and 3) passive flow from potential FTSE All-World Index inclusion (<a href="https://www.smartkarma.com/insights/ftse-geis-sep21-index-rebalance-preview-japan-edition" target="_blank" data-smartkarma-citation="insights:53004" rel="noopener">FTSE GEIS Sep21 Index Rebalance Preview: Japan Edition</a> )

Sansan Inc (4443 JP)  has corrected 15% since the company issued a profit warning last week. The final figures have now been released. That is the end of the "bad news."  The outlook and guidance for FY5/22 is more upbeat. The company expects sales growth to accelerate from 21% last year to ~26% this year, as the impact from the pandemic fades. Given the increased spend on marketing and personnel, we would expect to see a pick up in the key KPIs, customer acquisition and ARR (annual recurring revenue). The 3 catalysts to BUY the stock: 1) post correction the stock trades at an attractive 13x NTM EV/sales, 2) Key KPIs, customer acquisition and ARR, are recovering and 3) passive flow from potential FTSE All-World Index inclusion (FTSE GEIS Sep21 Index Rebalance Preview: Japan Edition )

<div>
<ul>
<li>
SanSan surprised the market with a profit warning after the market close on 7 July.   
</li>
<li>
Two trading days later, the stock was down 12%.   
</li>
<li>
Rather than focusing on Sales Growth continuing, the market may be overly focused on Operating Profit coming in under estimates.  
</li>
<li>
Our outlook remains positive.  
</li>
<li>
Share Price: ¥8,730, Market Cap: $2.5b, EV/TTM Rev:  17x</li>
</ul>
</div>




SanSan surprised the market with a profit warning after the market close on 7 July.   


Two trading days later, the stock was down 12%.   


Rather than focusing on Sales Growth continuing, the market may be overly focused on Operating Profit coming in under estimates.  


Our outlook remains positive.  


Share Price: ¥8,730, Market Cap: $2.5b, EV/TTM Rev:  17x



Japan Small Cap Growth - Sansan (4443) | Still a Long Way to Go

Japan

Sansan, Inc. provides mobile application software solutions. The Company offers business card management service by scanning the cards from scanner and smartphone. Sansan provides its services throughout Japan.

Sansan Inc (4443 JP)

San San (4443) - Networking, Not Net Working

San San offers investors exposure to multiple growth megatrends, including Digital Transformation, SaaS market penetration, and work-style reform...

Mark Chadwick

Buy Japan On This Breakout ; TOPIX Breaking Out To 21-Year Highs; Actionable Theme: Growth Sectors

Japan (TOPIX, TOPIX Small) was a big focus for us last week, and it remains the focus in today's report; this could be the start of a broad-based...

Vermilion Research

Buying Opportunities Within Emerging Markets and Japan; US Dollar Failing At 93.50

MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs...

Vermilion Research

Sansan (4443) | San Catalysts

It is a good time to BUY back into SanSan. Negative news flow has now played out. Looking forward we expect stronger growth in customer count and...

Mark Chadwick

Japan Small Cap Growth - Sansan (4443) | Still a Long Way to Go

SanSan surprised the market with a profit warning after the market close on 7 July. Two trading days later, the stock was down 12%. We would...

Mark Chadwick