Special research report for Japanese stock market “Prospects for E-Commerce related stocks” November 17, 2021 88

■This year’s top trend “sold over TikTok”

At the end of each year Japan’s Nikkei Trendy Magazine  releases a ranking of the top 30 trends to hit Japan for the year and in this year’s publication released on November 3rd, the number one trend for 2021 was “sold over TikTok”. TikTok is well known among young people as a platform for posting short videos accompanied by music, but as of recently, it has expanded into the realm of E-commerce. It was chosen for the ranking due to the number of products that were sold after having videos posted on TikTok. This July, TikTok’s subscribers exceeded 3 billion users for the first time on record, and in 2021 Q3 (July-Sep), the total expenditure by TikTok users exceeded the previous quarter’s by 39% at 535 million USD.

TikTok’s large influence on consumer spending has as of recently been a driver for other E-commerce platforms as well. E-commerce platform Shopify (SHOP) started expanding their services via TikTok last October, and BASE (4477), a Japanese company providing services to assist people in creating their own online shopping sites announced on September 29th that their merchant sites would be able to use TikTok for gathering customers and promoting their businesses.

Enigmo (3665) 1,073 yen(12/11 closing price)
・ Established in 2004. The company manages a social shopping site called “Buyma” on which Japanese living
overseas register themselves as “personal buyers” or exhibitors, and find trendy items to exhibit/sell to local
Japanese over the site. Sony Group (6758) is the largest shareholder.
・ For their FY2022 First Half (Feb-July) results announced on 14/9, sales revenue was up by 20.9% at 3.583 bil
yen while operating profit was up by 21.5% at 1.369 bil yen compared to the same period the previous year.
Since they expanded their business by working with a private international logistics service to ensure the safe
and speedy delivery of their items and upgraded their payment infrastructure, the number of members rose by
15% and number of items handled rose by 15% compared to the previous year.
・ Prospective annual performance: an increase in sales revenue of 15-25% to 8.139-8.846 bil yen, an increase
in operating profit of 1-16% to 3.063 to 3.519 bil yen. In Nikkei Trendy Magazine’s Top 30 Trends of 2021,
“Cross Border E-Commerce” was ranked number 12. Buyma, with more than 8.5 million members spanning 164
countries now has German international courier DHL on their side to put an end to their delivery issues. The
upcoming winter season is expected to be very cold due to La Nina and they expect to be selling a lot of winter
items.

Askul (2678) 1,540 yen(12/11 closing price)
・In 1993, started out as Askul department to Plus company, and in 1997 separated into a new company. The
business manages an E-Commerce business that nto only handles office supplies but also food, beverages and
alcohol. It categorizes its business into B2B and B2B2C segments.
・For their FY2022 May period 1Q (June-Aug) results announced on 16/9, sales revenue was up 2.3% at
102.442 bil yen while operating profit was up by 9.4% or 3.272 bil yen compared to the same time the previous
year. On the back of a demand backlash for products catering to COVID, demand for office supplies showed a
recovery this year and the B2B segment showed a large increase in revenue.
・According to the report on prospective annual performance, sales revenue is expected to increase by 1.9% or
430 billion yen, while operating profit is expected to be up by 0.5% or 14 bil yen. For the B2B segment, there is
an expected growth in sales revenue due to the fact that the company is expanding its customer base to include
the medical and long-term care industry as well as the manufacturing industry, and will expand their product
lineup to include special products catered to those industries. For their B2C segment, a point for investors is that
they are moving their platform “LOHACO” to Yahoo and Z-Holdings system infrastructure which will translate
into cost savings for the company

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