Anycolor Inc (TYO: 5032) is a ¥168B ($1.3B USD) market cap talent management / entertainment company that specializes in a new and rapidly growing sector of entertainment called Virtual Youtubers (VTubers).
I sold most of my Cover. Insane run up. I think long term these names do very well and trying to 'trade' this position is likely suboptimal and likely a mistake, but I hope to buy it lower.
Anycolor's earnings came out strong and they're projecting EPS of ¥291.3 for next year. Growth company with no net debt @ a little under 25x multiple. Slightly under the factset estimate embedded in the article though.
I remain more bullish on COVER. Relative outperformance of Cover since my comment on March 27 has been enormous. Anycolor operates more efficiently, but engagement KPIs are similar between the 2 companies. The valuation gap has narrowed tremendously though and now I think both names are worth owning.
Update: Sold most of my Anycolor at market open today and switched to COVER Corp. Same exact business. IPO'd yesterday. Bought in @ 1350-1400 ish JPY valuing it at 88 billion JPY vs 200 b for Anycolor. Over 2x gap in price despite being similar sized audiences. Anycolor's advantage is more diversified smaller talent, but COVER has more total subscribers. COVER isn't as profitabel as they waste some $ on Metaverse nonsense, but the gap in price is too big. I think it converges.
English presentaiton materials for anyone interested.
Anycolor's only major competitor/peer Cover Corp (Hololive) filed for IPO in Japan. Pricing should be done in late March. Excited to see how they price and would love to own if its priced anywhere near Anycolor in valuation (p/e wise). I'm bullish on this entire new media sector (especially at these prices).
Cover is wasting some money on a metaverse app/project. They're also a bit behind on merchandise monetization. They have similar sized audiences / subcriptions with Cover actually a bit ahead.
Cover also seems to be investing more into their production value. They spend a good amt of $ on a new studio in Japan recently. In the longer run I don't think current superior margins of anycolor really matter. I prefer Cover and am long.
No doubt Anycolor has superior margins and runs a leaner operation today, but the real bet here is in the growth of this relatively newish industry.
Given their market caps, if the industry continues growth just owning both may be the smartest and simplest way to play it. I'm long Cover and will pickup Anycolor if it gets cheaper.
Their English content does pull decent numbers, but not as big as Japan just yet. Viewership wise (using streaming revenue as a proxy), English (362m JPY) is 1/3 of Japan (926m JPY). Japan is much better monetized via merch/licensing though. Buying merch from the U.S. or Europe doesn't make sense, as a $5 keychain has $20 shipping fee. Both Cover and Anycolor have this issue and thus aren't monetizing their English audience as well. Merchandise is the big moneymaker here and is downstream from viewership.
The company didn't sell stock. Funds that invested in Anycolor well before their IPO were cashing out. Can't blame them. They also need to increase float to qualify for listing on the Prime market. It doesn't change the thesis at all. Given the growth rates and existing profitability, I think Anycolor is very cheap at 5100 JPY. It is around a 2% position for me, but I may increase it if it goes a bit lower.
Completely not related question. Why did you name your substack Altay Capital? Specifically why Altay? are you from one of the CIS countries ? if yes where are you from ?
I sold most of my Cover. Insane run up. I think long term these names do very well and trying to 'trade' this position is likely suboptimal and likely a mistake, but I hope to buy it lower.
And I did buy it back lower. Worked out great. Back in with a full position.
Anycolor's earnings came out strong and they're projecting EPS of ¥291.3 for next year. Growth company with no net debt @ a little under 25x multiple. Slightly under the factset estimate embedded in the article though.
I remain more bullish on COVER. Relative outperformance of Cover since my comment on March 27 has been enormous. Anycolor operates more efficiently, but engagement KPIs are similar between the 2 companies. The valuation gap has narrowed tremendously though and now I think both names are worth owning.
Update: Sold most of my Anycolor at market open today and switched to COVER Corp. Same exact business. IPO'd yesterday. Bought in @ 1350-1400 ish JPY valuing it at 88 billion JPY vs 200 b for Anycolor. Over 2x gap in price despite being similar sized audiences. Anycolor's advantage is more diversified smaller talent, but COVER has more total subscribers. COVER isn't as profitabel as they waste some $ on Metaverse nonsense, but the gap in price is too big. I think it converges.
English presentaiton materials for anyone interested.
https://cover-corp.com/ir/news/230327_5253_COVER_Materials_for_Growth_Opportunities_and_Strategies.pdf
COVER continues to outperform relative to Anycolor and will continue to do so IMO. They should trade similar marketcaps.
COVER continues to massively oupterform vs ANYCOLOR. It closed at 1400 level on IPO and up to 1900+ today. Anycolor remains flat since then.
Anycolor's only major competitor/peer Cover Corp (Hololive) filed for IPO in Japan. Pricing should be done in late March. Excited to see how they price and would love to own if its priced anywhere near Anycolor in valuation (p/e wise). I'm bullish on this entire new media sector (especially at these prices).
Why is Cover so expensive (48x) vs. Anycolor (19x)?
Cover is wasting some money on a metaverse app/project. They're also a bit behind on merchandise monetization. They have similar sized audiences / subcriptions with Cover actually a bit ahead.
Cover also seems to be investing more into their production value. They spend a good amt of $ on a new studio in Japan recently. In the longer run I don't think current superior margins of anycolor really matter. I prefer Cover and am long.
No doubt Anycolor has superior margins and runs a leaner operation today, but the real bet here is in the growth of this relatively newish industry.
Thank you! I may buy both stocks with the thesis that their content gets traction outside of Japan.
Given their market caps, if the industry continues growth just owning both may be the smartest and simplest way to play it. I'm long Cover and will pickup Anycolor if it gets cheaper.
Their English content does pull decent numbers, but not as big as Japan just yet. Viewership wise (using streaming revenue as a proxy), English (362m JPY) is 1/3 of Japan (926m JPY). Japan is much better monetized via merch/licensing though. Buying merch from the U.S. or Europe doesn't make sense, as a $5 keychain has $20 shipping fee. Both Cover and Anycolor have this issue and thus aren't monetizing their English audience as well. Merchandise is the big moneymaker here and is downstream from viewership.
what do you think of their secondary share offering ?
The company didn't sell stock. Funds that invested in Anycolor well before their IPO were cashing out. Can't blame them. They also need to increase float to qualify for listing on the Prime market. It doesn't change the thesis at all. Given the growth rates and existing profitability, I think Anycolor is very cheap at 5100 JPY. It is around a 2% position for me, but I may increase it if it goes a bit lower.
Thanks for quick answer.
Completely not related question. Why did you name your substack Altay Capital? Specifically why Altay? are you from one of the CIS countries ? if yes where are you from ?
I'm Turkish, Altay is my surname!