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]

Financial Data and Key Metrics - Revenue increased by 8% year-on-year to ¥513.6 billion, a record high for the first quarter [92] - Consolidated EBITDA reached ¥52.8 billion, with significant improvements in cash flow [93] - Non-GAAP operating income for the Internet segment increased by 14.8% to ¥13.6 billion [94] - Rakuten Mobile's EBITDA improved dramatically, with a reduction in losses compared to the previous year [102] Business Line Data and Key Metrics - Rakuten Ichiba and Travel showed steady growth in the domestic market, while overseas business also progressed [92] - Rakuten Mobile's subscriber base grew, with M&O service revenue increasing by ¥9.6 billion year-on-year [117] - Rakuten Card profitability improved, and Rakuten Payment turned profitable [117] - Rakuten Symphony's Open RAN strategy gained strong attention globally, with plans to open-source software [31][32] Market Data and Key Metrics - Domestic EC GMS growth rate improved by 1.5 percentage points quarter-on-quarter [95] - Rakuten Travel inbound GTV increased by 243% year-on-year [95] - Rakuten TV overseas saw a 43.8% year-on-year growth in user numbers [95] - Rakuten Mobile achieved 99.9% population coverage, with plans to expand 5G coverage further [130][131] Company Strategy and Industry Competition - The company is focusing on Open RAN and virtualization, aiming to disrupt the mobile industry with its software strategy [31][32] - Rakuten Mobile's success is seen as a test case for its software technology, with plans to showcase its effectiveness globally [52] - The company is leveraging AI to improve operational efficiency and customer support, with a 70% reduction in support fees achieved through AI implementation [111] - Rakuten is integrating its fintech services, including Rakuten Card, Rakuten Pay, and Rakuten Edy, to create synergistic effects [101][126] Management Commentary on Operating Environment and Future Outlook - Management emphasized the importance of quality over volume, particularly in the Domestic EC segment [119] - The company is confident in its ability to compete in the e-commerce market, with a focus on healthy user growth and optimized marketing expenses [28] - Rakuten Mobile is expected to achieve profitability on an annual consolidated non-GAAP OI basis in fiscal 2024 [138] - The company is proactively managing debt maturity and improving its credit rating to ensure financial soundness [139] Other Important Information - Rakuten launched a special "Welcome Home" campaign in May to attract returning customers, which has been well-received [5][6] - The company is reorganizing its fintech businesses to improve governance and synergy effects [71][126] - Rakuten AI 7 billion, a cost-effective open model for the Japanese language, has been launched and is performing comparably to other large language models [64] Q&A Session Summary Question: E-commerce market growth and GMV outlook - The company observed a strengthened customer base but noted a decline in GMV due to price hikes in home appliances [23] - Daily necessities, including food, showed positive growth, with expectations for further growth in Q3 and Q4 [24][26] Question: Rakuten Symphony's revenue growth and Open RAN adoption - Rakuten Symphony's Open RAN strategy is gaining traction globally, with plans to open-source its software to accelerate adoption [31][32] - The company expects significant revenue growth from its software business, particularly in Open RAN and cloud services [37] Question: Mobile business subscriber trends and profitability - Rakuten Mobile's subscriber growth is steady, with improvements in both new subscriptions and churn rates [66] - The company aims to increase ARPU to ¥2,500 and is focusing on high-quality services to enhance customer experience [41][67] Question: AI utilization and service offerings - Rakuten is leveraging AI to improve operational efficiency, customer support, and marketing productivity [111][136] - The company has launched AI-powered tools for merchants and plans to scale its AI applications across multiple services [142][143] Question: Financial restructuring and alliances - The company is reorganizing its fintech businesses to improve governance and synergy effects [71][126] - Rakuten is open to alliances with other entities to enhance its non-financial fintech offerings [72]