Find 100 Bagger (100x Stocks)! November 9, 2020 issue

【This week's video is here】
https://youtu.be/8pONqNePOzc
※This is a 33-minute video.

1. 100 Baggers candidate stock
7065 UPCORE listed on the Tokyo Stock Exchange Second Section

Stock code Stock Listing year
7065 UPCORE 2019

Minimum market cap (billion yen) Current market cap (billion yen) 100x market cap (billion yen)
52 268 5,200

Business type

Rentals and sales of logistics equipment such as pallets for loading (carriers). Expanding smart pallets equipped with location-tracking capabilities. Also active in assistive suits and logistics IoT fields, a comprehensive logistics support company

※Listing year shows the date of listing on the Tokyo Stock Exchange First Section, Second Section, Mothers, or JASDAQ
※ 100x market cap is calculated from the minimum market cap.

2. Key points
1. The company rents and sells loading pallets, appearing to be a flow business on the surface, but in fact operates a stock-type business with high revenue repeatability.

2. What drew attention is that even in logistics—traditionally a 3K workplace—a wave of business transformation is coming, and we are at a period where labor-saving, person-saving, and time-saving are required. The company is progressing not only with pallet rentals but also with logistics IoT to support logistics as a whole, offering stable growth for more than five years.

3. On October 15, alongside the main earnings announcement, the company announced a mid-term business plan. The plan spans five years and clearly shows a long-term growth orientation. The author believes the plan is highly reproducible and that progress on the plan should lead to an increase in corporate value.

4. This year's earnings forecast is for a profit decline due to increased capital expenditure planned to continue from the previous year, but sales are expected to grow. It is a temporary drop in earnings due to upfront investments for long-term growth. Meanwhile, EBITDA, representing earnings before interest, taxes, depreciation, and amortization, is expected to increase again this year, indicating continued growth.

5. By the final year of the mid-term plan, the fiscal year ending August 2025, EBITDA-based valuation projections suggest a market capitalization of up to about 85.2 billion yen (stock price 11,134 yen)—over three times the current market cap. The company is also aiming to reclassify to the Tokyo Stock Exchange Prime market, and a potential shift from the Second Section to the Prime market could occur during the plan period.

To continue, please refer to the PDF file.