Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

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/shift-inc" target="_blank" data-smartkarma-citation="entities:7266:1" rel="noopener">Shift Inc (3697 JP)</a> reported 4Q and full-year FY08/2022 results last week. Revenue increased 36.2% YoY to JPY17.9bn while OP increased 17.7% YoY to JPY 1.6bn during 4Q.</li>
<li>Full-Year revenue and OP grew 41% YoY (JPY64.9bn) and 73% YoY (JPY6.9bn) beating its own guidance while both revenue and OP fell slightly below consensus estimates.</li>
<li>Shift’s shares are down 14% YTD as the market excessively reacted to decline in margins which we think is unwarranted.</li>
</ul>



Shift Inc (3697 JP) reported 4Q and full-year FY08/2022 results last week. Revenue increased 36.2% YoY to JPY17.9bn while OP increased 17.7% YoY to JPY 1.6bn during 4Q.
Full-Year revenue and OP grew 41% YoY (JPY64.9bn) and 73% YoY (JPY6.9bn) beating its own guidance while both revenue and OP fell slightly below consensus estimates.
Shift’s shares are down 14% YTD as the market excessively reacted to decline in margins which we think is unwarranted.


Shift: Strong Earnings with Compelling Valuation

<ul>
<li>Shift reported 3QFY08/2022 results yesterday. Revenue grew 36.1% YoY to JPY17.1bn (vs consensus JPY18.3bn) while OP grew 25.7% to JPY1.3bn (vs consensus JPY1.54bn).</li>
<li>Revenue from the largest segment Enterprise market grew 35.3% while enterprise segment grew 47.5% YoY during the quarter.</li>
<li>According to Shift, the application of revenue recognition standard has lowered revenues and OP. The drop in OPM was due to heavy SG&amp;A expenses as a result of hiring.</li>
</ul>


Shift reported 3QFY08/2022 results yesterday. Revenue grew 36.1% YoY to JPY17.1bn (vs consensus JPY18.3bn) while OP grew 25.7% to JPY1.3bn (vs consensus JPY1.54bn).
Revenue from the largest segment Enterprise market grew 35.3% while enterprise segment grew 47.5% YoY during the quarter.
According to Shift, the application of revenue recognition standard has lowered revenues and OP. The drop in OPM was due to heavy SG&amp;A expenses as a result of hiring.


Shift 3Q: Earnings Below Consensus but Heavy Hiring Spend Should Help in the Long Run

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shift-inc" target="_blank" data-smartkarma-citation="entities:7266:1" rel="noopener">Shift Inc (3697 JP)</a> reported 2QFY08/2022 results last week. Revenue grew 43.5% YoY to JPY15.6bn (vs consensus JPY15.2bn) while OP 99.2% YoY to JPY1.9bn (vs consensus JPY1.1bn).</li>
<li>Both enterprise and entertainment markets saw strong growth in revenue while GPM of enterprise biz further expanded during the quarter.</li>
<li>Shift’s share price has moved up by about 16% since its results announcement and we think there is further upside.</li>
</ul>



Shift Inc (3697 JP) reported 2QFY08/2022 results last week. Revenue grew 43.5% YoY to JPY15.6bn (vs consensus JPY15.2bn) while OP 99.2% YoY to JPY1.9bn (vs consensus JPY1.1bn).
Both enterprise and entertainment markets saw strong growth in revenue while GPM of enterprise biz further expanded during the quarter.
Shift’s share price has moved up by about 16% since its results announcement and we think there is further upside.


Shift 2Q Results: Earnings Beat with Further Upgrade to Full-Year Guidance

<ul>
<li>Shift reported its 1QFY08/2022 results last week. Revenue for the quarter increased 51.5% YoY to JPY14.3bn while OP more than tripled to JPY1.95bn vs JPY548m a year ago.</li>
<li>Both Enterprise and Entertainment segments saw strong growth in revenue as well as improvement in GPM during the period.</li>
<li>Shift’s share price gained 7.4% following its earnings announcement and we expect the company's strong earnings momentum to continue over the next few years.</li>
</ul>


Shift reported its 1QFY08/2022 results last week. Revenue for the quarter increased 51.5% YoY to JPY14.3bn while OP more than tripled to JPY1.95bn vs JPY548m a year ago.
Both Enterprise and Entertainment segments saw strong growth in revenue as well as improvement in GPM during the period.
Shift’s share price gained 7.4% following its earnings announcement and we expect the company's strong earnings momentum to continue over the next few years.


Shift: Strong Earnings Momentum to Continue with Expanding Software Testing into Metaverse Market

Equity Capital Markets

<ul>
<li>M3’s shares have dropped 37.3% over the last 12-months to JPY5,774 from JPY9,207 as the company’s earnings growth has started slowing down. </li>
<li>The Medical Platform business was a key beneficiary of pandemic which saw accelerated transformation in pharma marketing. Strong growth of Medical Platform helped offset declines in other businesses during pandemic.</li>
<li>M3’s share price has been on a correction as pandemic drove its valuations to all-time highs. M3’s recent earnings revealed that its earnings growth has started decelerating.</li>
</ul>


M3’s shares have dropped 37.3% over the last 12-months to JPY5,774 from JPY9,207 as the company’s earnings growth has started slowing down. 
The Medical Platform business was a key beneficiary of pandemic which saw accelerated transformation in pharma marketing. Strong growth of Medical Platform helped offset declines in other businesses during pandemic.
M3’s share price has been on a correction as pandemic drove its valuations to all-time highs. M3’s recent earnings revealed that its earnings growth has started decelerating.


M3: Share Price Heading into a Correction and Further 20-25% Downside Likely

Japan

SHIFT Inc. offers information technology outsourcing services. The Company provides outsourcing software testing services to corporations and individual clients. SHIFT also provides software solutions and consulting services, as well as educational classes and programs.

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Shift Inc (3697 JP)

Shift: Strong Earnings with Compelling Valuation

Shift reported 4Q and full-year FY08/2022 results. Margins fell slightly below consensus due to less profitable projects. Market has been...

Shifara Samsudeen, FCMA, CGMA

Shift 3Q: Earnings Below Consensus but Heavy Hiring Spend Should Help in the Long Run

Shift's 3Q earnings fell short of consensus due to the application of revenue recognition standards and heavy spend on hiring. Shift's revenue...

Shifara Samsudeen, FCMA, CGMA

Shift 2Q Results: Earnings Beat with Further Upgrade to Full-Year Guidance

Shift reported 2QFY08/2022 results last week. Revenue grew 43.5% YoY to JPY15.6bn (vs consensus JPY15.2bn) while OP 99.2% YoY to JPY1.9bn (vs...

Shifara Samsudeen, FCMA, CGMA

Shift: Strong Earnings Momentum to Continue with Expanding Software Testing into Metaverse Market

Shift's quarterly earnings continue to grow at more than 50% driven by large development projects for enterprise clients. The company is expanding...

Shifara Samsudeen, FCMA, CGMA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Shift: Strong Earnings with Compelling Valuation

Shift reported 4Q and full-year FY08/2022 results. Margins fell slightly below consensus due to less profitable projects. Market has been...

Shifara Samsudeen, FCMA, CGMA

Shift 3Q: Earnings Below Consensus but Heavy Hiring Spend Should Help in the Long Run

Shift's 3Q earnings fell short of consensus due to the application of revenue recognition standards and heavy spend on hiring. Shift's revenue...

Shifara Samsudeen, FCMA, CGMA

Shift 2Q Results: Earnings Beat with Further Upgrade to Full-Year Guidance

Shift reported 2QFY08/2022 results last week. Revenue grew 43.5% YoY to JPY15.6bn (vs consensus JPY15.2bn) while OP 99.2% YoY to JPY1.9bn (vs...

Shifara Samsudeen, FCMA, CGMA

Shift: Strong Earnings Momentum to Continue with Expanding Software Testing into Metaverse Market

Shift's quarterly earnings continue to grow at more than 50% driven by large development projects for enterprise clients. The company is expanding...

Shifara Samsudeen, FCMA, CGMA

M3: Share Price Heading into a Correction and Further 20-25% Downside Likely

M3’s share price has been on a correction as pandemic drove its valuations to all-time highs. M3's earnings growth has started decelerating our...

Shifara Samsudeen, FCMA, CGMA