Great research but maybe a tip as a fellow equity analyst (self employed as well managing money and publishing). I got really excited at the start but by the end you seems to indicate its perfectly priced. In the beginning I thought this research is actionable; however, I'm guessing it's not anymore. Maybe focus more on actionable publishing and make it clear with your IRR on the stock from the very begining. But great note, and would have loved to buy something like this a roll up type play if it was actionable
Hey Sanchit, thank you for the feedback! I'm not sure if I will do a writeup exclusively to update Genda anytime soon so I will leave my thoughts here for you since you seem interested! I made two changes to my model since the writeup (which led me to own a position) - I assumed no multiple compression and took a EMM of 11x EV/EBITDA instead of 7.5x previously. This implies a FCF yield of 4.1%, which seems reasonable compared to the Tier 1 companies in Japan with solid business models and managements with a good understanding of capital allocation. I also revised my EBITDA assumptions upwards by 10-20% across the next 5 years as I realised I was too conservative after management revealed they are at a 18.5b Yen EBITDA run rate as of the latest quarter. This gives me an upside of 91%, 5-year IRR of 22% and a target price of 4,488 Yen as of today. Hope this helps!
Great research but maybe a tip as a fellow equity analyst (self employed as well managing money and publishing). I got really excited at the start but by the end you seems to indicate its perfectly priced. In the beginning I thought this research is actionable; however, I'm guessing it's not anymore. Maybe focus more on actionable publishing and make it clear with your IRR on the stock from the very begining. But great note, and would have loved to buy something like this a roll up type play if it was actionable
Hey Sanchit, thank you for the feedback! I'm not sure if I will do a writeup exclusively to update Genda anytime soon so I will leave my thoughts here for you since you seem interested! I made two changes to my model since the writeup (which led me to own a position) - I assumed no multiple compression and took a EMM of 11x EV/EBITDA instead of 7.5x previously. This implies a FCF yield of 4.1%, which seems reasonable compared to the Tier 1 companies in Japan with solid business models and managements with a good understanding of capital allocation. I also revised my EBITDA assumptions upwards by 10-20% across the next 5 years as I realised I was too conservative after management revealed they are at a 18.5b Yen EBITDA run rate as of the latest quarter. This gives me an upside of 91%, 5-year IRR of 22% and a target price of 4,488 Yen as of today. Hope this helps!