You will be Appier due to my influence
BGSJC June Update - Appier joins the 'appy 10 and from ho hum to Brian Lum
Dear reader,
ISIN: GB0006014582
Welcome to the June Baillie Giff Japanse Smaller Companies (BGJSC) update. The lack of progress on this OB25 for 25 idea (only up 3.6%) was been frustrating that while the (disclosed) top 10 have been demonstrably excellent that its many smaller ideas have created a drag on performance. Get rid! This month’s update tells us the number in the portfolio has been reduced from 80 to 66 with more changes to come, we are told.
Not just the holdings too. Ten years in the job Praveen Kumar has been relieved of command, and his deputy Fund Manager Brian Lum has been promoted and takes control. Brian intends to slim down and concentrate the portfolio based on deep conviction. Sounds good to me. Did Baillie Giff decide that based on reading the Oak Bloke? I’ll leave you to ponder that one.
This is the June 2025 update:
Which we see delivers £639m earnings on £10.7bn marcaps so a P/E of 16.8X. The top 10’s share prices are up 33% YTD in Yen terms in 2025.
(That’s why just a 3.6% YTD performance for the Fund is frustrating)
If we include former top 10s then the P/E increases to 18.8X and the YTD performance falls to 25%. These deliver an average 1.42% yield too.
New Holding 9th Largest Appier
I like their strapline “Turning AI into ROI by Making Software Intelligent”
Appier software is uniquely designed to help companies achieve the best possible sales and marketing outcomes by tackling the entire customer journey across all aspects of the acquisition and interaction.
It boasts some great customer names.
With customer badges including Toyota, Audi, BMW, Mazda, Burger King and Pizza Hut it is clear that its customers peer over to what their competitors are doing. They’re using Appier they mutter. So, so should we.
Its latest update show accelerated revenue growth of 31% and profit growth of 12%. It is optimistic in its 2025 outlook and the strategic value of new capabilities that will lead to deeper penetration of its key accounts. That profits will accelerate.
Appier has offices globally in Japan, Europe, US and China. Two thirds is Japan, with about 10% across the other three areas and a token amount in Singapore. It is targeting accelerated growth particularly to support its customers in their expansion in EMEA and in US e-commerce.
Rising operating income masks investment back into its products that is being partly expensed (and not capitalised). Y756m is an increase in investment of about £3.6m to about £25m per year and £12m software amortisation (on a £800m market cap). So £37m per year or 40% of Opex is actually R&D.
ARR is £0.76bn so about 1X the marcap. (P/S of 1), and deepening relationships mean that new customers are being won (15% growth) and existing ones are buying more (revenue retention is at 118% per year).
Case Study #1
Appier has numerous success stories such as this. A 6.33X increase to gross merchandise volume. If you are wondering what “ROAS-Driven Retargeting and Contextual Expansion” might mean well if you showed interest by watching an advert a microsecond longer than when the “skip” button appeared then you must be a bit interested. So advertisers target you with similar adverts. Context expansion means widening the targeting parameters then advertising rods to people watching videos about fishing, that you might try your luck with those looking at boat buying video watchers.
Appier goes beyond the targeting and ad serving to ask the most fundamental question in marketing: How do I waste less money? Eh?
“Half the money I spend on advertising is wasted; the trouble is, I don't know which half.”
John Wanamaker
So CrossX predicts the lifetime value (LTV) of prospects to deliver high LTV users.
Case Study #2
For game publisher Nexon by identifying the users who had reached Level 20 it achieved a 55% conversion by targeting high quality users.
Ascential is one comparison in the UK to Appier but that was de-listed and bought by Informa for £1.2bn (vs £0.8bn marcap for Appier).
Its last numbers were £206m revenue and £56m EBITDA.
Appier’s comparatives are broadly similar for £233m revenue and £40m EBITDA.
SFOR is another although comparing its years of losses and destruction of shareholder value vs Appier wouldn’t be instructive.
In next month’s update we will see the 2Q25 updates feeding through. I watch with interest.
Regards
The Oak Bloke
Disclaimers:
This is not advice, you make your own investment decisions.
Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as "blue chip"