Daily BriefsJapan

Japan: Makuake Inc, Rakus Co Ltd, Mitsubishi UFJ Financial (MUFG) and more

In today’s briefing:

  • Small Cap Growth: Makuake (4479) – Innovative Ideas Drive Strong Q4 Sales
  • Small Cap Growth: Rakus (3923) – Q2 Sales +28%
  • MUFG (8306 JP):  Wavering in the Ranks

Small Cap Growth: Makuake (4479) – Innovative Ideas Drive Strong Q4 Sales

By Mark Chadwick

Makuake Inc (4479 JP)  is a unique online platform that helps companies to launch new products and services online. The seven-year-old company is a product of the Cyberagent incubation umbrella and debuted on Mothers in December 2019. The company’s core business is the Makuake platform, which supports new product launches, brings them in front of buyers/supporters, before formal market release. The Makuake Incubator Studio (MIS) helps firms with strong R&D to develop and commercialize products via their platform.  

This note looks at the recent Q4 results, while the following note discusses in more detail the Market, Moat and Management.: Small Cap Growth: Makuake (4479) – Launching Innovative Ideas  

Small Cap Growth: Rakus (3923) – Q2 Sales +28%

By Mark Chadwick

Rakus Co Ltd (3923 JP)  operates a cloud-based Business Spend Management (BSM) service that helps companies and employees efficiently track and settle expenses. The expense management software, Raku Raku Seisan, helps enterprises to enhance productivity, compliance, and control overspending.

The recent quarterly results confirm that top line growth continues unabated. Given the market for BSM is potentially huge in Japan and currently underpenetrated, Rakus should continue to see a strong growth trajectory in the foreseeable future.  

This note looks at the strong Q2 results, while the following note looks at the Market, Moat and Management: Small Cap Growth: Rakus (3923) – Sayonara Manual Expenses! 

MUFG (8306 JP):  Wavering in the Ranks

By J. Brian Waterhouse

Interim results for Mitsubishi UFJ Financial (MUFG) (8306 JP)highlighted the fragility of the profit contribution from several of the group’s recent overseas acquisitions, and the increasing reliance on equity-accounted profits from Morgan Stanley (MS US) to keep group earnings up.  Rising credit costs were by far the largest headwinds to group profitability, with 1H FY3/2021 credit costs rising to an annualized 48bps: far exceeding the group’s 21bps in credit costs for the whole of FY3/2020.

Buying megabank shares is always a ‘crowded trade’ at the best of times.  While there often seems to be little difference in share price performance between MUFG and mega-rival Sumitomo Mitsui Financial Group (8316 JP), on balance we prefer the latter for the group’s tighter discipline and more stable profits ‘track record’.

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