Japan Deep Value
Japanese Equity Research, Deep Value & Below-Book Opportunities
Digital Garage is unlikely to become a Pasona-style situation because Resona, its largest holder, wants the payments business to grow. Current management is unlikely to deliver a large outright capital return, which Resona also does not want for tax reasons; @absreturnchaser sees little reason for a further re-rating on that basis. x.com
Digital Garage's deep discount may finally get attention, with Old Peak Group reporting a 5% stake, and there is a lot of value to unlock. Its ¥88 billion market cap compares with a ¥136 billion Kakaku.com holding, about ¥32 billion of net cash, ¥10-15 billion of venture investments and a payments business worth ¥100-150 billion on earnings and GMV against peers, an easy 70% sum-of-the-parts discount. x.com
Global Payments needs clean free cash flow to make its buyback case credible. Its share count is down 13% in a year, while growth is still positive at 4.5%, aided by nominal inflation and Worldpay's e-commerce tailwind, though Worldpay grows more slowly than modern peers. x.com
Visa and Mastercard are duopolists riding the death of cash. Their payments networks are too wide for entrants to replicate, giving high margins, pricing power, strong cash flow and high-return reinvestment; they fight smaller peers, not each other, so in a growing market each slice keeps getting bigger. The market underpays persistent quality: in arvy's Swiss study of 2000-2025, sorting on five-year average ROIC earned a 7.16% annual premium, while one year of ROIC proved insignificant. x.com … Show more
PayPay is not worth chasing at its $11.8B IPO valuation: by US standards it is normally valued, not a screaming buy. The Japanese payments, investing and banking super app earned about $248M on FY2025 revenue of about $1.9B, up 26%, with near-zero stock compensation, at roughly 44x earnings and 5.8x sales. IPO hype and a low float may lift it, but majority owner SoftBank's lockup expires in September 2026, an ATM-like overhang. Better mispriced choices exist, such as Reddit. x.com x.com
