Asset Manager Investing in Global Technology Sector

We're an asset management firm allocating our capital into asset classes benefiting from technological innovation and applications globally. We serve as a family office of a tech professional who has spent over a decade as an entrepreneur, operator, and venture investor across Asia and the US.

Our small team is made up of diverse investment professionals who research, identify, and execute relevant opportunities. We occasionally share some of our investment memos, insights, and analysis here.

Friday, June 5, 2020

Q2.2020 - Rakuten: Attractive Bet On Mobile


  • Rakuten is now officially the 4th telecom operator in Japan after SoftBank, NTT, and KDDI.
  • As a new entrant with no legacy debt, it has a competitive advantage, which allows leveraging the latest cloud-based virtual network technology from the start.
  • Rakuten has partnered with KDDI to launch an offering at 50% cheaper price than SoftBank and NTT. KDDI has a bleeding market share and will be very incentivized to win.
  • At 1x P/S, Rakuten is an attractive buy. The stock has received a lot of pressure in the last few years, potentially due to the volatile profit margins and perception of over-expansion.
  • Rakuten is still the largest eCommerce player in Japan by far. Core business still grows at +18%, while it also has enough scale and capital to enter virtually any market.

Rakuten (OTCPK:RKUNY) is the largest eCommerce company in Japan. At ¥1.3 trillion (~$12 billion) of revenue in 2019, it is roughly 8 times smaller than SoftBank (OTCPK:SFTBY). Given its success in eCommerce, the company has diversified its business by expanding into fintech, media, logistics, and more through M&As, organic, and also minority investments in the last decade. Despite consolidated revenue consistently growing at +15% and even accelerating to ~18% in recent times, net income and ROE have been quite volatile.

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