Jiro Yasu presented his in-depth investment thesis on Amuse (Tokyo: 4301) at Asian Investing Summit 2017. Jiro Yasu’s colleague, Patrick Rial, also participated in this session.

Amuse is a management company of Japanese music artists. The company has a market cap of ~30 billion yen, with net cash of 20 billion yen. EBIT is roughly 3-4 billion yen. Jiro believes the equity has a good risk reward profile, with downside protection (~45% of market cap in net cash and securities) and estimated intrinsic value of 3,281 yen per share (~40% upside potential).

Amuse’s business should continue to steadily grow, as the live event market should continue to grow and the decline of the music rights business may stabilize or turn around as paid‐subscribers for music streaming services grow. Amuse’s discount to intrinsic value may get smaller as revenue and profits increase and shareholder returns improve. The company may garner more attention in 2018, the 40th anniversary since its founding, as some large‐scale events are planned. The founding family owns 30% of the shares.

Jiro derives upside of ~40% by applying multiples of 8x EBIT for the artist management business and 10x EIBT for the content business.

About the instructor:

Jiro Yasu has more than 15 years of investment experience in the Japanese equity markets including at Varecs Partners, First Eagle Investment Management and Daiwa Securities America. As the Representative Director of Varecs Partners, Jiro spearheads the investment firm’s efforts to identify mid-sized listed Japanese companies where corporate value can be realized for all stakeholders by working together with management. Jiro holds a BA in economics with a specialty in econometrics from Keio University.

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