'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

Former Japan Equity PM with over 30 of experience now providing database-driven analysis of the market, sectors, peer groups and stocks for LightStream Research.

Leveraging data and graphic analysis provided by Japan Analytics, and the related Japan Analytics iPad App, we provide insights on companies are often ignored by the sell-side as well as challenging conventional wisdom on the market overall.

'Quantamental' Japan Specialist

CyberAgent (4751 JP): Key Takeaways from Our Discussion with the IR Team

CyberAgent (4751 JP) 2Q Earnings Update: AbemaTV Continues to Impress

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Equity Bottom-Up

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/086/610/original/2019-05-02_15-37-25.png?1556779059" class="editor-image img-responsive" data-smartkarma-image-id="86610"></figure><p>Source: Japan Analytics</p>
</div><div class="content-caption">This update on <a href="https://www.smartkarma.com/entities/8197" target="_blank" data-smartkarma-citation="entities:8197:1">CyberAgent Inc (4751 JP)</a> should be read in conjunction with our earlier Insight <a href="https://www.smartkarma.com/insights/cyberagent-tumbling-dice" target="_blank" data-smartkarma-citation="insights:27690">CyberAgent: Tumbling Dice</a>. </div><p><strong>RECORD SALES</strong> - As the company never tires of pointing out, CyberAgent's revenues continue to grow apace. The interim quarter saw a record amount of revenue in any quarter of ¥117b, an increase of 7% year-on-year and a record amount for any trailing-twelve-month (TTM) period of ¥440b, 10% above the level reached in FY18-Q2. The IR materials describe this achievement as <em>'reaching cruising speed again'</em>, although from the TTM chart above it is hard to see when there was any deceleration. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/086/616/original/2019-05-02_15-56-10.png?1556780188" class="editor-image img-responsive" data-smartkarma-image-id="86616"></figure><div class="content-caption">Source: CyberAgent</div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/086/614/original/2019-05-02_15-35-10.png?1556779655" class="editor-image img-responsive" data-smartkarma-image-id="86614"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>DON'T LOOK ANY FURTHER</strong> - The further down the Income Statment one travels, the less appealing the picture. The company likes to present its profitability in terms of what it describes as 'existing business, excluding investment development'. The latter has produced over ¥20b in one-off gains over the last five years, which have helped offset nearly ¥62b in 'up-front investment in the AbemaTV business' which will presumably cease not to exist if and when it turns a profit. Even using CyberAgent's logic, the second quarter was the third straight quarter of declining year-on-year profitability. Shareholders meanwhile have to make do with what is generated at the true bottom-line of the Income Statement - Comprehensive Income which saw an increase of just ¥3.2b in the quarter, 24% of 'adjusted' profits.  <strong>CyberAgent's Shareholders' Equity (including Other Comprehensive Income) is ¥358m lower than at FY17-Q4 and has declined by 4% since peaking in FY18-Q3.  It is no surprise therefore that the company's PBR has declined by a third in less than a year, although it is still 39% above the FY17-Q4 low.  </strong></p><div class="content-highlight"><p>In the<strong> DETAIL</strong> section below, we shall cover the interim results in more detail and update the implied valuation for the AbemaTV business. In keeping with the previous report, we provide this brief musical interlude from <strong>M People</strong> in Berlin.</p></div><p><iframe src="https://www.youtube.com/embed/IwBCyvBMgjQ" width="1280" height="720" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="allowfullscreen"></iframe></p>


Source: Japan Analytics
This update on CyberAgent Inc (4751 JP) should be read in conjunction with our earlier Insight CyberAgent: Tumbling Dice. RECORD SALES - As the company never tires of pointing out, CyberAgent's revenues continue to grow apace. The interim quarter saw a record amount of revenue in any quarter of ¥117b, an increase of 7% year-on-year and a record amount for any trailing-twelve-month (TTM) period of ¥440b, 10% above the level reached in FY18-Q2. The IR materials describe this achievement as 'reaching cruising speed again', although from the TTM chart above it is hard to see when there was any deceleration. Source: CyberAgentSource: Japan AnalyticsDON'T LOOK ANY FURTHER - The further down the Income Statment one travels, the less appealing the picture. The company likes to present its profitability in terms of what it describes as 'existing business, excluding investment development'. The latter has produced over ¥20b in one-off gains over the last five years, which have helped offset nearly ¥62b in 'up-front investment in the AbemaTV business' which will presumably cease not to exist if and when it turns a profit. Even using CyberAgent's logic, the second quarter was the third straight quarter of declining year-on-year profitability. Shareholders meanwhile have to make do with what is generated at the true bottom-line of the Income Statement - Comprehensive Income which saw an increase of just ¥3.2b in the quarter, 24% of 'adjusted' profits.  CyberAgent's Shareholders' Equity (including Other Comprehensive Income) is ¥358m lower than at FY17-Q4 and has declined by 4% since peaking in FY18-Q3.  It is no surprise therefore that the company's PBR has declined by a third in less than a year, although it is still 39% above the FY17-Q4 low.  In the DETAIL section below, we shall cover the interim results in more detail and update the implied valuation for the AbemaTV business. In keeping with the previous report, we provide this brief musical interlude from M People in Berlin.

4751 🇯🇵 CyberAgent • Interim Update - Don't Look Any Further