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M3, Inc. (2413:JP)
Medicine, Media and Metamorphosis
Changing the World of Medicine Using the Internet
Some Abbreviations
❖ MRs - “Medical Representatives”
❖ CSO - “Contract Sales Organization” contract marketing and sales
op...
What’s M3?
❖ M3, Inc. supplies medical information services for doctors through Internet. The Company
also supports market...
M3.com website
M3.com website
AskDoctors: Where you can consult doctors on the internet. It’s Japan’s
Largest Medical Q&A site.
Apps for Smartphones and Tablets to provide information at any time
and anywhere!
M3.com App
Medical News, Doctors communi...
Investment Thesis
❖ Long term growth opportunity in healthcare business
❖ Strong demands for M3’s Innovative products and ...
Healthcare for long term?
❖ Japan’s Older population (55+) ~ 39% of total population.
❖ Increasing Life Expectancy in Japa...
Population Pyramid of Japan: A population pyramid illustrates the age and sex structure of a country's
population and may ...
Investment Thesis
❖ Long term growth opportunity in healthcare business
❖ Strong demands for M3’s Innovative products and ...
Strong demands for eDetails
❖ Demand for eDetails is quite high for busy physicians that require
timely information at the...
What is the ideal ratio of on-line and off-line promotional information
(“details”) from pharma companies?
MR-kun’s Growth Potential in Japan
Investment Thesis
❖ Long term growth opportunity in healthcare business
❖ Strong demands for M3’s Innovative products and ...
China! we are coming for you.
❖ M3 also expand their services into China (healthcare professional portal site
“Medlive.cn”...
China Business Result in Millions Yen
Sales and Earning trend of Overseas business in Millions Yen
Number of Physicians registered with M3
Investment Thesis
❖ Long term growth opportunity in healthcare business
❖ Strong demands for M3’s Innovative products and ...
Past Acquisitions for bright future
❖ Acquired Mediscience Planning Inc. in 2013.
Past Acquisitions for bright future
❖ Acquired Neues Co., Ltd., (one of the Largest SMO business in Japan) in
2014 which w...
Investment Thesis
❖ Long term growth opportunity in healthcare business
❖ Strong demands for M3’s Innovative products and ...
Strong Sales and Earning Growth
CAGR ~42% NP CAGR ~46%
OP CAGR ~57%
Investment Thesis
❖ Long term growth opportunity in healthcare business
❖ Strong demands for M3’s Innovative products and ...
Tactical Asset Allocation
❖ Positive effect from BOJ’s massive Quantitative and Qualitative Easing
program (QQE) will driv...
TOPIX Weekly Chart from June 2012 to April 2015
Golden Cross
Golden Cross
Oct 31, 2014
Announcement of Expansion of the QQ...
Tactical Asset Allocation
❖ The Government Pension Investment Fund (GPIF) of Japan raised
domestic stock allocation from 1...
GPIF’s End of 2014 Asset Allocation
Investment Thesis
❖ Long term growth opportunity in healthcare business
❖ Strong demands for M3’s Innovative products and ...
Institutional Investors Support
❖ “Institutional Investors could drive stock price significantly”
❖ 25.3% Shares of M3 own...
RISKS for investing in TSE
❖ Failure of BOJ’s QQE. If they fail, it can be much worse than “the
Lost Decade”.
❖ Currency R...
❖ M3, Inc. is definitely expensive by looking at its P/E ~ 80 only.
❖ Since M3 is a growth stock in healthcare “technology...
Possible Price Target
❖ MedPeer Inc (6095:JP) its competitor
is trading at P/E ~ 110
❖ M3’s EPS ~ 28 with growth ~ 40% ex....
Investment Thesis
❖ Long term growth opportunity in healthcare business
❖ Strong demands for M3’s Innovative products and ...
M3 (2413:JP) 1 year Weekly chart
M3 (2413:JP) 6 months Daily chart
❖ Invest 50% of allocated capital when
1) Price breaches 50 days SMA resistance with strong volume (preferably > 50
days A...
Trade Strategy
❖ Hedge Currency Risk by Long YCS 50% of position size.
❖ Consider take profit when return ~ 20%
❖ MUST “CU...
You Will Survive if CutLoss!
You Will Survive if CutLoss!
Position Sizing
❖ Minimum allocated capital should be 10% of total
available fund. Otherwise position might be too small.
...
Position Sizing
❖ Maximum position size?
❖ Define your maximum risk based on your risk
tolerance. Let 2% drawdown = Max fo...
“At the end of the day, the most important thing is how good
are you at risk control.”
“If I have positions going against ...
Q&A
❖ More Information about M3 please visit
http://corporate.m3.com/en/
❖ Learn more about Trend Following
Jesse Livermor...
“The only way you get a real education
in the market is To invest cash, Track
your trade, and Study your mistakes.”
Jesse ...
M3 stock presentation
M3 stock presentation
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M3 stock presentation

  1. 1. M3, Inc. (2413:JP) Medicine, Media and Metamorphosis Changing the World of Medicine Using the Internet
  2. 2. Some Abbreviations ❖ MRs - “Medical Representatives” ❖ CSO - “Contract Sales Organization” contract marketing and sales operations of pharmaceutical products and medical equipment to medical institutions. ❖ CRO - “Contract Research Organization” provides drug development services outsourced on a contract basis. ❖ SMO - “Site Management Organization” supports medical facilities in executing clinical trial.
  3. 3. What’s M3? ❖ M3, Inc. supplies medical information services for doctors through Internet. The Company also supports marketing of pharmaceutical companies and medical equipment manufacturers. ❖ Medical Portal segment - CSO, MRs ➢ Medical-related company Marketing sector MR-kun, m3MT, m3.com ➢ Survey sector ➢ Other sector - QOL-kun services, business partner services and paid content services ❖ Evidence Solution segment - CRO and SMO ❖ Overseas segment - CSO, MRs and research services. ❖ Medical Treatment Platform segment - Development, distribution and support of electronic medical records.
  4. 4. M3.com website
  5. 5. M3.com website
  6. 6. AskDoctors: Where you can consult doctors on the internet. It’s Japan’s Largest Medical Q&A site.
  7. 7. Apps for Smartphones and Tablets to provide information at any time and anywhere! M3.com App Medical News, Doctors community, Medical Conferences, Popular Medical articles. MR. Kun App Latest medical and drug information to help doctors with everyday practice.
  8. 8. Investment Thesis ❖ Long term growth opportunity in healthcare business ❖ Strong demands for M3’s Innovative products and services. ❖ Growing overseas business. ❖ Value creation via M&A. ❖ Strong Sales and Earning growth. ❖ It’s time to invest in Japan: Tactical Asset Allocation - BOJ’s QQE + GPIF ❖ Institutional Investors are accumulating shares ❖ Compelling Trend following chart
  9. 9. Healthcare for long term? ❖ Japan’s Older population (55+) ~ 39% of total population. ❖ Increasing Life Expectancy in Japan, China and the US. ❖ Healthcare sector in Japan is enormous. Medical service and peripheral business ~ 50 Trillions yens (~10%GDP). ❖ Sector controlled by only 290,000 physicians representing only 0.2% of the national population. ❖ Increasing health expenditure as %GDP in Japan and China (US remain flat) - By 2035 healthcare’s shares of GDP ~2X according to McKinsey. ❖ Long term Growth opportunity for any healthcare related business.
  10. 10. Population Pyramid of Japan: A population pyramid illustrates the age and sex structure of a country's population and may provide insights about political and social stability, as well as economic development. 39% of Total Population
  11. 11. Investment Thesis ❖ Long term growth opportunity in healthcare business ❖ Strong demands for M3’s Innovative products and services. ❖ Growing overseas business. ❖ Value creation via M&A. ❖ Strong Sales and Earning growth. ❖ It’s time to invest in Japan: Tactical Asset Allocation - BOJ’s QQE + GPIF ❖ Institutional Investors are accumulating shares ❖ Compelling Trend following chart
  12. 12. Strong demands for eDetails ❖ Demand for eDetails is quite high for busy physicians that require timely information at their convenience without the limitations imposed by their off-line MRs. ❖ Doctors spend the most time collecting information via the Internet. Conversely, pharmaceutical firms spend the majority of their budget on MR related costs. >> Not cost efficient for Pharma companies, Opportunity for M3’s MR-kun. ❖ Major clients are increasing usage of MR-kun. Average revenue from Top20 clients increase ~ 20% YoY.
  13. 13. What is the ideal ratio of on-line and off-line promotional information (“details”) from pharma companies?
  14. 14. MR-kun’s Growth Potential in Japan
  15. 15. Investment Thesis ❖ Long term growth opportunity in healthcare business ❖ Strong demands for M3’s Innovative products and services. ❖ Growing overseas business. ❖ Value creation via M&A. ❖ Strong Sales and Earning growth. ❖ It’s time to invest in Japan: Tactical Asset Allocation - BOJ’s QQE + GPIF ❖ Institutional Investors are accumulating shares ❖ Compelling Trend following chart
  16. 16. China! we are coming for you. ❖ M3 also expand their services into China (healthcare professional portal site “Medlive.cn” ) via joint venture with Kingyee (Beijing) Co., Ltd ❖ By utilizing M3’s proficiency in aggressive member recruitment, membership exceeded one million medical professionals as of August 27, 2014.
  17. 17. China Business Result in Millions Yen
  18. 18. Sales and Earning trend of Overseas business in Millions Yen
  19. 19. Number of Physicians registered with M3
  20. 20. Investment Thesis ❖ Long term growth opportunity in healthcare business ❖ Strong demands for M3’s Innovative products and services. ❖ Growing overseas business. ❖ Value creation via M&A. ❖ Strong Sales and Earning growth. ❖ It’s time to invest in Japan: Tactical Asset Allocation - BOJ’s QQE + GPIF ❖ Institutional Investors are accumulating shares ❖ Compelling Trend following chart
  21. 21. Past Acquisitions for bright future ❖ Acquired Mediscience Planning Inc. in 2013.
  22. 22. Past Acquisitions for bright future ❖ Acquired Neues Co., Ltd., (one of the Largest SMO business in Japan) in 2014 which will help M3 to evolve as Japan’s Leading Comprehensive Clinical Trial Services Provider. ❖ Acquired Integrated Development Associates Co., Ltd. (provides consulting for Pan Asia drug development) in 2015 to streamline delivery of Drug R&D Services for Overseas Biopharmaceutical firms. ❖ Acquired MDJob Find Inc. (provides job placement services for physicians via operation of New England Physician Recruitment Center) in 2015 to further accelerate the growth of M3 Group’s physician job placement operations in the U.S.
  23. 23. Investment Thesis ❖ Long term growth opportunity in healthcare business ❖ Strong demands for M3’s Innovative products and services. ❖ Growing overseas business. ❖ Value creation via M&A. ❖ Strong Sales and Earning growth. ❖ It’s time to invest in Japan: Tactical Asset Allocation - BOJ’s QQE + GPIF ❖ Institutional Investors are accumulating shares ❖ Compelling Trend following chart
  24. 24. Strong Sales and Earning Growth CAGR ~42% NP CAGR ~46% OP CAGR ~57%
  25. 25. Investment Thesis ❖ Long term growth opportunity in healthcare business ❖ Strong demands for M3’s Innovative products and services. ❖ Growing overseas business. ❖ Value creation via M&A. ❖ Strong Sales and Earning growth. ❖ It’s time to invest in Japan: Tactical Asset Allocation - BOJ’s QQE + GPIF ❖ Institutional Investors are accumulating shares ❖ Compelling Trend following chart
  26. 26. Tactical Asset Allocation ❖ Positive effect from BOJ’s massive Quantitative and Qualitative Easing program (QQE) will drive equities market as we saw from US’s multiple QEs. Since the BOJ started their stimulus program, the Japan stock market has been in a good uptrend (sort of flat in 2014 due to multiple geopolitical risks and China slow down). ❖ Japan’s economy growth seems to be on track according to the latest BOJ’s minutes of monetary policy meeting, released on April 13th 2015. ❖ As one of oil importers, Japan will definitely benefit from decline in oil price.
  27. 27. TOPIX Weekly Chart from June 2012 to April 2015 Golden Cross Golden Cross Oct 31, 2014 Announcement of Expansion of the QQE TOPIX +4% +19%
  28. 28. Tactical Asset Allocation ❖ The Government Pension Investment Fund (GPIF) of Japan raised domestic stock allocation from 12% to 25%. ❖ The World’s largest public pension fund remain “Bullish”. ❖ Keep funds flowing into the market.
  29. 29. GPIF’s End of 2014 Asset Allocation
  30. 30. Investment Thesis ❖ Long term growth opportunity in healthcare business ❖ Strong demands for M3’s Innovative products and services. ❖ Growing overseas business. ❖ Value creation via M&A. ❖ Strong Sales and Earning growth. ❖ It’s time to invest in Japan: Tactical Asset Allocation - BOJ’s QQE + GPIF ❖ Institutional Investors are accumulating shares ❖ Compelling Trend following chart
  31. 31. Institutional Investors Support ❖ “Institutional Investors could drive stock price significantly” ❖ 25.3% Shares of M3 owned by 171 Institutional Investors with 14 net buyers lately (3 new positions, 31 increased positions). - Good institutional supports
  32. 32. RISKS for investing in TSE ❖ Failure of BOJ’s QQE. If they fail, it can be much worse than “the Lost Decade”. ❖ Currency RISK since JPY will be depreciated as a result of BOJ’s QQE. LONG “YCS” as a currency hedge. ❖ “Language Barrier” Most of Japanese companies will release their materials in both Japanese and English. However, it could take awhile until they put English version on their IR website. Use Bloomberg terminal or http: //www.kaijinet.com/jpExpress/default.aspx
  33. 33. ❖ M3, Inc. is definitely expensive by looking at its P/E ~ 80 only. ❖ Since M3 is a growth stock in healthcare “technology” sector, hence its high P/E should be justified as long as its earning keeps growing strong. ❖ How can we invest in “expensive” stock? Answer: “Trend Following” strategy ❖ “At the end of the day, your job is to buy what goes up and to sell what goes down.” - Paul Tudor Jones Valuation?
  34. 34. Possible Price Target ❖ MedPeer Inc (6095:JP) its competitor is trading at P/E ~ 110 ❖ M3’s EPS ~ 28 with growth ~ 40% ex. Acquisition effect ❖ PPT ~ 110*0.7*1.4*28 ~ 3000 Yen per share ❖ Upside ~ 20% ❖ So Reward to Risk(at 8%) > 2:1 (Minimum upside for being considered as a good trade is 16%)
  35. 35. Investment Thesis ❖ Long term growth opportunity in healthcare business ❖ Strong demands for M3’s Innovative products and services. ❖ Growing overseas business. ❖ Value creation via M&A. ❖ Strong Sales and Earning growth. ❖ It’s time to invest in Japan: Tactical Asset Allocation - BOJ’s QQE + GPIF ❖ Institutional Investors are accumulating shares ❖ Compelling Trend following chart.
  36. 36. M3 (2413:JP) 1 year Weekly chart
  37. 37. M3 (2413:JP) 6 months Daily chart
  38. 38. ❖ Invest 50% of allocated capital when 1) Price breaches 50 days SMA resistance with strong volume (preferably > 50 days Average Volume). 2) Price breaks out from new base with strong volume. 3) Pocket Pivot Buypoint - Up day with volume > prior sessions’ Volume ❖ Allocate 30% when price goes up 2.5% and 20%when price goes up another 2% (so we will buy within range of 5% from buypoint). “Pyramiding: Averaging UP not Averaging Down!” ❖ Unlike the US market, you have to buy a stock in a unit of Lot i.e. 1 Lot = 100 shares, 1000 shares. So it might be difficult to do pyramiding. Trade Strategy
  39. 39. Trade Strategy ❖ Hedge Currency Risk by Long YCS 50% of position size. ❖ Consider take profit when return ~ 20% ❖ MUST “CUTLOSS” if loss reaches 8% (Max. 10%) ❖ Why CUTLOSS?
  40. 40. You Will Survive if CutLoss!
  41. 41. You Will Survive if CutLoss!
  42. 42. Position Sizing ❖ Minimum allocated capital should be 10% of total available fund. Otherwise position might be too small. ❖ With 8% cutloss for 10% position size then we only risk 8%*0.1 = 0.8% of portfolio
  43. 43. Position Sizing ❖ Maximum position size? ❖ Define your maximum risk based on your risk tolerance. Let 2% drawdown = Max for each position. Maximum position size = 2%/0.08 = 25% ❖ Good trade should yield Reward to Risk ≥ 2:1
  44. 44. “At the end of the day, the most important thing is how good are you at risk control.” “If I have positions going against me, I get right out; if they are going for me, I keep them… Risk control is the most important thing in trading. If you have a losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in.” Paul Tudor Jones
  45. 45. Q&A ❖ More Information about M3 please visit http://corporate.m3.com/en/ ❖ Learn more about Trend Following Jesse Livermore’s books Investor's Business Daily Stan Weinsteins' Stage Analysis http://www.trendfollowing.com/resources/
  46. 46. “The only way you get a real education in the market is To invest cash, Track your trade, and Study your mistakes.” Jesse Livermore

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