Core Insights - The opening of the Rakuten Group's Hangzhou branch marks a significant step in enhancing Hangzhou's position as a global cross-border e-commerce hub [1][2] - Hangzhou's comprehensive pilot zone has leveraged policy advantages, industrial cluster benefits, and a strong digital economy foundation, making it a preferred location for global e-commerce giants targeting the Asia-Pacific market [1] - Rakuten's establishment of a core hub in East China in Hangzhou reflects its recognition of the city's cross-border e-commerce ecosystem [1] Company Developments - Rakuten Group, founded in 1997, is a benchmark enterprise in the global internet ecosystem, with extensive experience in e-commerce retail, cross-border payments, and digital marketing [1] - Since opening its doors to Chinese sellers in 2019, Rakuten has transitioned from a model where Japanese entities operated stores to allowing direct entry for Chinese companies, significantly lowering entry barriers for Chinese sellers [1] - The official operation of the Hangzhou branch will activate Rakuten's "East China engine" for its development in China [1] Industry Context - The CEO of Rakuten's China division highlighted that East China is one of the most economically vibrant regions in China, with strong manufacturing and supply chain advantages that align well with Japanese market demands [2] - Products from East China, such as outdoor goods, textiles, and household items, have maintained a significant presence in the Japanese market due to their high quality and innovation [2] - The establishment of the Hangzhou branch aims to bridge the final gap between Rakuten's ecosystem and East China's industries, facilitating efficient access for more East China sellers to Japanese and global consumers through digital tools and localized support [2]

Group 1 - The article focuses on value investing opportunities in Asia, particularly in Hong Kong, targeting stocks with significant discrepancies between market price and intrinsic value [1] - The investment strategy emphasizes deep value balance sheet bargains, such as net cash stocks and low price-to-book (P/B) stocks, as well as wide moat stocks that represent high-quality businesses [1] - The author provides a range of watch lists with monthly updates to assist investors in identifying potential investment opportunities [1]

Core Insights - Rakuten has launched the Rakuten American Express® Card in the U.S., exclusively for its members, enhancing the shopping experience with industry-leading Cash Back rewards and no annual fee [1][4] Group 1: Card Features - The Rakuten Card offers an additional 4% Cash Back on purchases made through Rakuten's platform, applicable up to the first $7,000 of spending each calendar year [2] - Cardholders earn an extra 5% Cash Back when dining at over 22,000 Rakuten partner restaurants, totaling 10% Cash Back on Rakuten Dining [2] - The card provides 2% Cash Back on groceries and restaurants, and 1% Cash Back on all other purchases outside of Rakuten's platform [3] Group 2: Partnerships and Technology - The card program is powered by Imprint and issued by First Electronic Bank through American Express' Agile Partner Platform [5] - The collaboration aims to deliver a digital and customer-first experience, combining Rakuten's Cash Back program with American Express's benefits [4][5] Group 3: Additional Benefits - Cardholders gain access to Amex Offers for shopping, dining, and travel, as well as Amex ExperiencesTM in music, entertainment, and theater [4] - Retail protections include Purchase Protection and Extended Warranty, enhancing the value proposition for cardholders [4] Group 4: Sign-Up Incentives - New cardholders receive a sign-up bonus of $25 Cash Back after spending $500 within the first 90 days [6] - Members referring new users can earn $30 Cash Back once the new member makes qualifying purchases totaling at least $30 within 90 days [6] Group 5: Company Background - Rakuten has become a leading shopping platform since its founding in 1999, with members earning $4.6 billion in Cash Back through its services [7]

Company Overview - Imprint, a 5-year-old credit card startup, has successfully secured a co-branded card deal with Rakuten, indicating its growing influence in the co-branded credit card market [1] - The company recently raised $70 million in additional capital, increasing its valuation by 50% to $900 million within less than a year [2] Industry Dynamics - The co-branded credit card sector is highly competitive, with major players including JPMorgan Chase, Capital One, Citigroup, and Synchrony vying for partnerships with retailers, airlines, and hotels [3] - Imprint is actively engaging with Fortune 500 companies to establish partnerships, positioning itself as a viable alternative to larger banks like Synchrony and Barclays [4] Financial Position - Imprint has raised a total of $330 million, primarily retained on its balance sheet, to demonstrate financial stability to potential partners [4] - The startup has access to approximately $1.5 billion in credit lines from banks such as Citigroup, Truist, and Mizuho, which it utilizes to extend loans to card customers [5]

Core Viewpoint - Rakuten Group Inc. will receive support from Meti in the development of artificial intelligence (AI) models [1] Group 1 - Rakuten Group Inc. is focusing on enhancing its capabilities in AI technology [1] - The collaboration with Meti is expected to bolster Rakuten's AI development efforts [1]

Core Insights - The article focuses on the Asia Value & Moat Stocks research service, which targets value investors looking for significant discrepancies between stock prices and intrinsic values, particularly in the Asian market, especially Hong Kong [1] Group 1: Investment Strategy - The service emphasizes deep value balance sheet bargains, such as net cash stocks, net-nets, low price-to-book (P/B) stocks, and sum-of-the-parts discounts [1] - It also highlights wide moat stocks, which are characterized by strong earnings power at discounted prices, including high-quality businesses and hidden champions [1] Group 2: Research Offerings - The author provides a range of watch lists with monthly updates to assist investors in identifying potential investment opportunities [1]

Rakuten Mobile & Subscribers - Rakuten Mobile achieved its first quarterly profit since the start of full-scale MNO investment, with JPY 12.3 billion in operating income for Q3/24 [9, 10] - Total Rakuten Mobile subscribers reached 8.12 million lines as of November 10, 2024 [5] - Rakuten Mobile subscribers use +2.45 more services than non-subscribers [24, 26] - Rakuten Mobile's MNO service revenue increased +42.2% YoY in Q3/24 [100] - Rakuten Mobile's adjusted MNO churn rate was 1.09% as of Q3/24 [100] Financial Performance - Q3/24 consolidated revenue reached JPY 566.7 billion, a +9.3% YoY increase [40] - FinTech segment revenue increased +12.8% YoY, reaching JPY 208.2 billion [41, 72] - Q3/24 consolidated Non-GAAP operating income increased by JPY 26.5 billion YoY, a +57.2% increase [49] - Q3/24 consolidated EBITDA achieved profitability at JPY 92.2 billion, a +159.1% YoY increase [53, 54] FinTech Segment - Rakuten Card shopping GTV increased +12.7% YoY to JPY 6.0 trillion [75] - Rakuten Securities general accounts increased +20.3% YoY to 11.65 million [75] - Rakuten Bank accounts increased +12.6% YoY to 16.19 million [75] AI Initiatives - AI implementation led to a 31% reduction in customer support costs at Rakuten Mobile [36] - Rakuten is driving groupwide productivity enhancement through the "Triple 20" project, aiming for a 20% improvement in operational, marketing, and client productivity [35]

Financial Data and Key Metrics - Consolidated revenue reached a record high of JPY566.7 billion, a 9.3% increase YoY [17] - Non-GAAP operating income improved by JPY53.4 billion YoY, recording a profit of JPY12.3 billion [18] - IFRS operating income recorded a profit of JPY538 million [18] - Consolidated EBITDA increased by 159.1% YoY to JPY92.2 billion [18] Business Segment Performance Internet Services - Revenue increased by 4.4% YoY to JPY314.6 billion [19] - Non-GAAP operating income rose by 54.2% YoY to JPY21.2 billion [20] - Rakuten Travel grew by 43.1% compared to pre-pandemic levels [21] - Advertising revenue increased by 4.3% YoY [21] - International business unit revenue grew by 9.4% YoY [22] Fintech - Revenue increased by 12.8% YoY to JPY208.2 billion [26] - Operating income rose by 57.2% YoY to JPY40 billion [26] - Rakuten Card Shopping GTV reached JPY6 trillion, a 12.7% increase YoY [27] - Rakuten Securities general account increased by 20.3% YoY to JPY11.65 million [27] - Rakuten Bank deposit balance grew by 16.4% YoY to JPY11.1 trillion [28] Mobile - Revenue increased by 19.5% YoY, surpassing JPY100 billion [33] - Non-GAAP operating income improved by JPY26.5 billion YoY [33] - EBITDA reached JPY30.5 billion, showing positive growth [33] - Total subscribers reached 8.12 million, with MNO service revenue growing by 42.2% [35] - ARPU stood at JPY2,801, approaching the target of JPY3,000 [35] Market and Strategic Insights - Rakuten Mobile is positioned as a key pillar of the ecosystem, driving usage of other Rakuten services [11][13] - Subscribers use 3.25 services on average, compared to 1.25 for non-subscribers [12] - AI-driven cost reductions in customer support saved 31%, reducing costs from JPY195 to JPY37 per user [15] - The company aims for a 20% improvement in marketing, operational, and client efficiency through AI [16] - Rakuten Mobile plans to expand 5G coverage, targeting 100% coverage in Tokyo Metro by March 2026 [41][42] Management Commentary - The company achieved self-funding for Rakuten Mobile, with no reliance on external loans [5] - Rakuten Mobile's growth is supported by its cost advantage and rich data assets [6] - The company is leveraging AI to enhance customer experience and operational efficiency [15][16] - Rakuten Symphony is driving technological advancements, with 45 global customers and a target of 100+ by next year [57] - The company is focused on improving profitability, with Rakuten Mobile expected to achieve monthly EBITDA profitability by 2024 and annual profitability by 2025 [63] Other Key Information - Rakuten Mobile's ecosystem contribution is reflected in its financials, with adjusted MNO churn at 1.09% [35] - The company is integrating generative AI into Rakuten Link, enabling advanced communication features like simultaneous interpretation [50] - Rakuten Symphony is expanding its cloud services, focusing on private cloud solutions for businesses [55] - The company is targeting energy savings of 20% through AI-driven base station operations [44] Q&A Session - No specific questions or answers were provided in the document [84]

Core Insights - The research service "Asia Value & Moat Stocks" targets value investors looking for Asia-listed stocks with significant discrepancies between market price and intrinsic value, focusing on deep value balance sheet bargains and wide moat stocks [1] Group 1 - The service emphasizes investment opportunities in the Hong Kong market, particularly in deep value balance sheet bargains such as net cash stocks and low price-to-book (P/B) stocks [1] - It also highlights wide moat stocks, which are characterized by strong earnings power and include high-quality businesses and hidden champions [1] - The author provides a range of watch lists with monthly updates to assist investors in identifying potential investment opportunities [1]

Financial Data and Key Metrics Changes - Consolidated revenue reached JPY 537.3 billion, an increase of 8.1% year-on-year, marking a record high [5] - Operating income improved by JPY 27.6 billion year-on-year, moving from a loss of JPY 11.8 billion to a positive EBITDA of JPY 66.8 billion [5][6] - Rakuten Mobile achieved non-consolidated pre-marketing cash flow profit for the first time [3] Business Segment Data and Key Metrics Changes - Internet Services segment revenue was JPY 303.9 billion, up 3.1% year-on-year, with operating income increasing by 30.3% to JPY 18.9 billion [7] - FinTech segment revenue grew by 12% year-on-year to JPY 202.7 billion, with operating income at JPY 42.3 billion, a 28.1% increase [12] - Rakuten Mobile subscriber count reached 7.7 million, with an adjusted MNO churn rate of 1.04% [16][17] Market Data and Key Metrics Changes - Rakuten Travel and Domestic Hotel Checkout GTV increased by 34% compared to FY 2019 [8] - Overseas businesses, including Rakuten TV and Viber, showed significant growth, with Rakuten TV users increasing by 44.2% year-on-year to 112.1 million [9] - Rakuten Card Shopping GTV rose to JPY 5.9 trillion, reflecting a nearly 14% increase [12] Company Strategy and Development Direction - The company aims to enhance its mobile services and expand its ecosystem, focusing on improving network quality and coverage [43] - Plans to leverage AI technology to improve operational efficiency and customer engagement across various services [31][34] - The company is committed to maintaining financial soundness and addressing refinancing risks through disciplined financial policies [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of Rakuten Mobile, attributing subscriber growth to improved network quality and competitive pricing [43] - The company is optimistic about the impact of AI on its services and overall business performance [31][34] - Management acknowledged potential challenges from competitors but emphasized the unique value proposition of their pricing strategy [54] Other Important Information - The company is actively preparing for potential natural disasters, such as the Nankai Trough earthquake, by enhancing its infrastructure and response capabilities [55] - The upcoming reorganization of the FinTech segment is expected to enhance business efficiency and profitability [62] Q&A Session All Questions and Answers Question: What factors contribute to the steady growth of mobile subscribers compared to competitors? - Management highlighted improved network quality, a simple pricing plan, and the benefits of the Rakuten ecosystem as key factors driving subscriber growth [43] Question: How will the recent interest rate increase impact financing? - Management noted that over 90% of their debt is fixed-rate, minimizing direct impacts from interest rate increases, and emphasized that refinancing needs for 2025 have been addressed [45][46] Question: What is the impact of the Platinum Band on internet marketing and customer acquisition? - Management indicated that both digital marketing and traditional media are being utilized to promote the Platinum Band, aiming to reach a broader audience [50] Question: How does the company view the potential impact of competitors' pricing strategies? - Management believes that their unique pricing plan and the added value from the Rakuten ecosystem will mitigate competitive impacts [54] Question: Can you provide an update on the FinTech reorganization? - Management confirmed a three-month postponement for the reorganization to ensure thorough consideration of all factors, with a target completion date set for January 2025 [62]