On November 12, 2024, Laxus Technologies received approval for its listing on the Tokyo Stock Exchange Growth Market. In this post, we will discuss an overview of Laxus Technologies, its business model, the offering details for its IPO, and our initial price prediction based on the disclosed information.
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Company Overview & Business Model of Laxus Technologies
Laxus Technologies offers a subscription-based sharing service for high-quality brand bags in Japan, providing consumers with easy access to luxury handbags. The service, named *Laxus*, was launched in February 2015 with a subscription model, allowing customers to enjoy bags for a fixed monthly fee while promoting sustainability. The company focuses on reusing brand bags, maintaining them over time, and maximizing their value.
The service is primarily offered through a smartphone app and website, where users can select and enjoy brand bags as often as they like. The bags are sourced from the reuse market and carefully maintained by expert staff to ensure high quality. Additionally, Laxus offers a “Buy Now” service, where users can purchase a bag they’ve rented if they decide they’d like to own it.
The business model maximizes the “usage value” of brand bags through sharing, and the “time value” as the bags retain residual value over time. This results in a “value circulation model,” where Laxus generates revenue over the lifecycle of a bag. The company has also developed B2B/C sales channels, optimizing its sales strategies based on the market value of each bag.
Revenue is primarily generated through monthly subscription fees, with two main plans: the single plan at ¥9,800/month and the double plan at ¥13,600/month. The majority of users are working women in their 30s and 40s, utilizing the bags for everyday life, commuting, and travel. According to user interviews, the service is particularly popular among those who hesitate to buy expensive brand bags but are keen to try them out before making a purchase.
As of now, 66% of Laxus’s users have been subscribed for over 12 months, indicating strong customer retention. The customer base has grown to 181,000, with a steady increase in new members. The company’s customer acquisition cost (CAC) is recouped in about 2.9 months, and there is also an upsell opportunity through its “try-and-buy” service, where users can purchase bags they have rented.
For more detailed business information, you can refer to the company’s securities registration statement available on the Tokyo Stock Exchange’s website:
https://www.jpx.co.jp/listing/stocks/new/mklp77000000l73f-att/12LaxusTechnologies-1s.pdf
IPO Offering Overview
– **Approval Date for Listing:** November 12, 2024 (Tuesday)
– **Indicative Price Range Announcement:** November 26, 2024 (Tuesday)
– **Price Determination Date:** December 4, 2024 (Wednesday)
– **Listing Date:** December 13, 2024 (Friday)
Laxus Technologies will not only offer shares to Japanese investors but will also include some international institutional investors from Europe and Asia. This method of offering is typically chosen when the IPO is expected to have a certain market capitalization and offering size.
The underwriting syndicate includes 9 companies:
– **Lead Underwriter:** Mizuho Securities
– **Syndicate Members:** Nomura Securities, SBI Securities, Matsui Securities, Rakuten Securities, Kyokuto Securities, Iwai Cosmo Securities, Toyo Securities, Hirogin Securities
The offering price as disclosed in the prospectus is ¥281 per share.
The total offering size, based on the disclosed price, is approximately ¥2.41 billion, which includes:
– **Public Offering (Domestic + Overseas):** ¥1.83 billion
– **Secondary Offering:** ¥0.26 billion
– **Over-allotment Option:** ¥0.31 billion
This offering is relatively small compared to other IPOs in 2024.
Considerations on the Offering Price
The initial price disclosed in the prospectus is ¥281 per share. To calculate the fully diluted market capitalization, we used the following:
– **Fully Diluted Shares:** 26,686,083 shares
– **Market Cap Calculation:** ¥281 × 26,686,083 shares = ¥7.5 billion
Laxus Technologies has disclosed its financial projections for the fiscal year ending March 2025.
https://corp.laxus.co/file/20241112/00.pdf
The company expects a positive net income in Q2 of FY2025, achieving profitability. Based on these projections, the earnings per share (EPS) is estimated at ¥21.64, while using the fully diluted share count, the EPS is ¥17.05. This results in a Price-to-Earnings (PER) ratio of 16.48x. Using the prospectus price, the Price-to-Sales Ratio (PSR) is calculated at 2.78x, based on a projected sales figure of ¥2.7 billion for FY2025.
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### **Competitor Comparison**
There are several companies in the fashion subscription service space that we can compare Laxus Technologies to. One example is AirCloset (9557), which offers a monthly fashion rental service. AirCloset’s current market capitalization is ¥3.3 billion, and it is projecting FY2025 sales of ¥4.8 billion, with a PER of 328x and a PSR of 0.7x. Although AirCloset is expected to move into profitability this year, the companies are in different growth phases, making a direct comparison difficult. However, based on the PSR, Laxus Technologies appears relatively expensive.
Another potential comparison is Oisix Ra Daichi (3182), a B2C subscription service that is already profitable. Oisix has a market cap of ¥51.8 billion, a PER of 17.9x, and a PSR of 0.2x based on its FY2025 revenue forecast of ¥255 billion. When comparing PERs, Laxus Technologies’s 16.48x is slightly lower than Oisix’s 17.9x, suggesting a potential discount of around 8%.
Initial Price Prediction
Given that Laxus Technologies has already achieved profitability, we base our initial price prediction on Oisix’s PER of 17.9x. Applying a 20% IPO discount results in a PER of 14.3x. Using the predicted EPS of ¥17.05, the expected IPO price would be ¥243.
After listing, the fair value would be calculated as ¥17.05 × 17.9x = ¥305, which we propose as the initial trading price.
Given its profitable track record despite being a subscription-based model, the stock is likely to exhibit stable performance post-IPO. We will continue to monitor its progress closely.
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This blog post provides a thorough analysis of Laxus Technologies’ upcoming IPO, including the company’s business model, its valuation, and a comparison to industry peers. Stay tuned for further updates!
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