Japan Experts, Extraordinary Performance, Astris Advisory Japan

Astris Advisory Japan

Japan Experts, Extraordinary Performance

Our Corporate Advisory service is designed to give clients access to a wider range of investors. These include Japan specialists as well as global investors. The goal is to help achieve a fair equity valuation.

Equity Bottom-Up

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<li>Normalizing operations centred on sustained growth – Simplex demonstrated solid execution delivering record-high quarterly sales and OP in Q3 FY3/25, underpinned by a V-shaped margin recovery in the System Integration segment.</li>
<li>Although the insurance project cancellation experienced in Q2 FY3/25 dented profitability, Q3 FY3/25 results show that this was a one-time event.</li>
<li>High growth has been sustained at Strategy/DX Consulting and Enterprise DX, providing a strong foundation for continued business expansion. </li>
</ul>


Normalizing operations centred on sustained growth – Simplex demonstrated solid execution delivering record-high quarterly sales and OP in Q3 FY3/25, underpinned by a V-shaped margin recovery in the System Integration segment.
Although the insurance project cancellation experienced in Q2 FY3/25 dented profitability, Q3 FY3/25 results show that this was a one-time event.
High growth has been sustained at Strategy/DX Consulting and Enterprise DX, providing a strong foundation for continued business expansion. 


Simplex Holdings (4373 JP) - Q3 FY3/25 Results Update

<ul><li>Insurance project cancellation already priced in–Q1-2FY3/25 results confirmed a ¥0.6bn sales write-off for the cancellation of the Insurance System Integration Project.</li><li>We believe positive factors such as continued strong demand for DX services, improving profitability at Operation Service, and high order visibility outweigh this temporary event.</li><li>However, we do seek clarity in terms of understanding the company’s strategic direction over its insurance solutions. </li></ul>

Insurance project cancellation already priced in–Q1-2FY3/25 results confirmed a ¥0.6bn sales write-off for the cancellation of the Insurance System Integration Project.We believe positive factors such as continued strong demand for DX services, improving profitability at Operation Service, and high order visibility outweigh this temporary event.However, we do seek clarity in terms of understanding the company’s strategic direction over its insurance solutions. 

Simplex Holdings (4373 JP) - Positive Underlying Growth Trend, Though Clarity Needed

<ul><li>Q1FY3/25 results indicated a slow start for earnings, despite a robust profile for sales growth at 16.5% YoY and both quarterly orders and backlog at record highs.</li><li>The key takeaways are: 1) although reported OP fell 4.8% YoY, underlying OP growth was 4.6% YoY when restating for one-time expenses for a new office, 2) quality of earnings remains sound despite cases of project cost overruns, and 3) the sustained strong outlook for orders provides high earnings visibility.</li><li>We believe that the direction of travel remains positive for earnings growth, given strong order visibility and as the company’s operations continue to scale.</li></ul>

Q1FY3/25 results indicated a slow start for earnings, despite a robust profile for sales growth at 16.5% YoY and both quarterly orders and backlog at record highs.The key takeaways are: 1) although reported OP fell 4.8% YoY, underlying OP growth was 4.6% YoY when restating for one-time expenses for a new office, 2) quality of earnings remains sound despite cases of project cost overruns, and 3) the sustained strong outlook for orders provides high earnings visibility.We believe that the direction of travel remains positive for earnings growth, given strong order visibility and as the company’s operations continue to scale.

Simplex Holdings (4373 JP) - Long Term Growth Scenario Remains Intact

<ul><li><strong>Positioned for sustained growth</strong> – Q1-4 FY3/24 results were in line with guidance, with the company generating consistent and sustainable double-digit growth for sales and earnings demonstrating the company’s characteristics as a compounding business.</li><li>We believe its brand, human capital, and technological innovation are competitive advantages that generate shareholder value, with free cash flow recovering YoY to ¥7.34bn from ¥3.26bn in FY3/23.</li><li>Future capital allocation points to business investment in staff and R&amp;D and scope for M&amp;A to support growth and improve shareholder returns. </li></ul>

Positioned for sustained growth – Q1-4 FY3/24 results were in line with guidance, with the company generating consistent and sustainable double-digit growth for sales and earnings demonstrating the company’s characteristics as a compounding business.We believe its brand, human capital, and technological innovation are competitive advantages that generate shareholder value, with free cash flow recovering YoY to ¥7.34bn from ¥3.26bn in FY3/23.Future capital allocation points to business investment in staff and R&amp;D and scope for M&amp;A to support growth and improve shareholder returns. 

Simplex Holdings (4373) - Compounding Business with a Consulting Growth Engine

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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.

Event-Driven

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<li>
<a href="https://www.smartkarma.com/entities/socionext-inc" target="_blank" data-smartkarma-citation="entities:36351:1" rel="noopener">Socionext (6526 JP)</a> was listed on 12th Oct 2022, when it raised US$457m in its upsized Japan IPO. Its six-month lockup will expire on 9th Apr 2023.</li>
<li>Socionext is a fabless semiconductor provider which commenced operations after integrating the system on a chip (SoC) businesses of Fujitsu Semiconductor Limited and Panasonic Holding Corporation in 2015.</li>
<li>Coming up for six-month lockup expiry are the Development Bank of Japan, Fujitsu and Panasonic, the trio had each trimmed their respective stakes in the IPO.</li>
</ul>



Socionext (6526 JP) was listed on 12th Oct 2022, when it raised US$457m in its upsized Japan IPO. Its six-month lockup will expire on 9th Apr 2023.
Socionext is a fabless semiconductor provider which commenced operations after integrating the system on a chip (SoC) businesses of Fujitsu Semiconductor Limited and Panasonic Holding Corporation in 2015.
Coming up for six-month lockup expiry are the Development Bank of Japan, Fujitsu and Panasonic, the trio had each trimmed their respective stakes in the IPO.


Socionext Lock-Up - Up 2.67x Since IPO. US$930m Worth of Shares to Be Unlocked

Japan

Simplex Holdings, Inc. provides system information technology solutions. The Company offers system consulting, system development, system operation and maintenance, and other services.  Simplex Holdings serves financial institutions across worldwide.

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Simplex Holdings (4373 JP)