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

<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>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.</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

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

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<li>
<a href="https://www.smartkarma.com/entities/trial-holdings-inc" target="_blank" data-smartkarma-citation="entities:36821:1" rel="noopener">Trial Holdings (5882 JP)</a> priced its IPO at JPY1,700 per share to raise gross proceeds of US$256 million. The shares will start trading on 21 March.</li>
<li>We previously discussed the IPO in <a href="https://www.smartkarma.com/insights/trial-holdings-ipo-the-investment-case" target="_blank" data-smartkarma-citation="insights:130521" rel="noopener">Trial Holdings IPO: The Investment Case</a> and <a href="https://www.smartkarma.com/insights/trial-holdings-ipo-valuation-thoughts" target="_blank" data-smartkarma-citation="insights:132126" rel="noopener">Trial Holdings IPO: Valuation Thoughts</a>. </li>
<li>The peers have modestly re-rated since the prospectus was released on February 19. The IPO price remains attractive. </li>
</ul>



Trial Holdings (5882 JP) priced its IPO at JPY1,700 per share to raise gross proceeds of US$256 million. The shares will start trading on 21 March.
We previously discussed the IPO in Trial Holdings IPO: The Investment Case and Trial Holdings IPO: Valuation Thoughts. 
The peers have modestly re-rated since the prospectus was released on February 19. The IPO price remains attractive. 


<ul><li>Q1-3 FY3/2024 results were in line with unchanged FY company guidance, with the company displaying 1) sustained growth in Strategic/DX Consulting demand and System Integration, 2) ongoing successful business expansion into new market sectors, and 3) management achieving a delicate equilibrium between actively generating current growth and investing for the long-term success of the business.</li><li>Although DX will remain a structural tailwind for some time to come, the company’s growth potential will be underpinned by access to high-caliber hires at both graduate and mid-career levels.</li><li>We believe the announcement of a business and capital partnership with CIRCULATION (7379) points in the right direction in establishing a channel to a quality talent pool.</li></ul>

Q1-3 FY3/2024 results were in line with unchanged FY company guidance, with the company displaying 1) sustained growth in Strategic/DX Consulting demand and System Integration, 2) ongoing successful business expansion into new market sectors, and 3) management achieving a delicate equilibrium between actively generating current growth and investing for the long-term success of the business.Although DX will remain a structural tailwind for some time to come, the company’s growth potential will be underpinned by access to high-caliber hires at both graduate and mid-career levels.We believe the announcement of a business and capital partnership with CIRCULATION (7379) points in the right direction in establishing a channel to a quality talent pool.

Simplex Holdings (4373) - An Optimal Balance of Growth and Investment

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/genda-inc" target="_blank" data-smartkarma-citation="entities:39911:1" rel="noopener">GENDA (9166 JP)</a> (GENDA) was listed on the TSE on 28th July 2023. The IPO had been a mix of primary and secondary shares. </li>
<li>Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.</li>
<li>Coming up for six-month lockup expiry are the pre-IPO shareholders, notably Midas Capital, and the firm’s executives and directors.</li>
</ul>



GENDA (9166 JP) (GENDA) was listed on the TSE on 28th July 2023. The IPO had been a mix of primary and secondary shares. 
Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.
Coming up for six-month lockup expiry are the pre-IPO shareholders, notably Midas Capital, and the firm’s executives and directors.


GENDA Lock-Up - Since Selling in the IPO, Midas Capital's Remaining Stake Is up Another 60%

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)