Market's Concern for Rakuten's Plan to Invest in Highly Competitive Businesses Should Be Addressed
Our impression of Rakuten's June quarter results is mixed. On the positive side, we are encouraged with the solid growth of its fintech segment, including the contribution of the acquired insurance business, which will reinforce Rakuten's ecosystem. And in addition, profits from the investment of Rakuten Capital is also supporting its profitability. On the negative side, the slower revenue growth and margin contraction of domestic EC business suggest harsh competition in this field. Accordingly,...Rakuten is mainly engaged in the Internet-related business. Along with its affiliates, Co. operates in two business segments. The Internet Services segment is engaged in the operation of electronic commerce sites, including an Internet shopping mall "Rakuten Ichiba," an online cash back site, a travel booking site, portal sites and digital contents sites; the sale of advertising on Co.'s sites; the provision of messaging and communication services; and the management of a professional baseball team "Tohoku Rakuten Golden Eagles." FinTech segment is engaged in the provision of Internet banking services and online securities trading services, and the credit card and life insurance businesses.
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