[Discovering companies recommended for long-term investment?!] Copy for Tenbagger Project #16 - Navi+ - GogoJungle | Auto Trading - Market Analysis

“Diversified investment is a hedge against ignorance. For those who know what they are doing, diversification hardly matters.”

Warren Buffett

Hello, this is Hirose.

This project aims for 100 million yen with four 10x turns, a deep-dive into a company in the third installment of the series.

By studying that company thoroughly in my own way,I will eventually rate it with my own judgment and bias, and call it“Ten-bagger expectation value.”That’s what I intend to do.

These are just my personal impressions and opinions, so I don’t entertain objections! lol

And, as usual, I’ll write that “Invest at your own risk” — I had to include that, so I’m writing it here.

This time as well, I’ll bring two A-rank companies.

Now, please go ahead?

・3921 Neo Japan

◆ What kind of company?

It is a company that develops and sells software.Founded 30 years ago, dedicated to software.

It seems to specialize in management software and groupware used by organizations. Also,many of its clients are large enterprises and government bodies, and its track record is verifiable.

Providing convenient IT systems for businesses, it could be considered a telework-related stock.

Corporate mission is

“To make business ICT tools a social infrastructure, and bring IT benefits to every company.”

◆ Business content

As for the main business contents,

① Development and sale of packaged software

② Development and sale of application services

③ System integration

are the three pillars.

In simple terms, for enterprises,

for example, managing customer information

① On-premise software

② Cloud-based software (monthly)

③ Custom-made solutions tailored to the company

Something like that (laughs)

All of it is software-related business, leveraging those strengths.

◆ Performance

Regarding performance,

not flashy, but solid and steady.

As a result,10 consecutive years of revenue and profit growth— a wonderful track record.

Also, cloud-based recurring revenue is increasing smoothly. Churn rate around 0.2% remains low.

They update major features twice a year, quickly incorporating customer feedback. This likely boosts customer satisfaction.

And currently,stock revenue accounts for more than 70% of sales.

This increase in stock revenue means more stable sales, which is very good.

◆ Future prospects

In addition to the above steadiness, I also felt potential for the future.

What I find interesting is not only expanding bases in Japan, butcurrently pushing into Southeast Asia.

The reason is that work styles there are very similar to Japan’s.

It’s not about betting on the US, China, or India, but steadily entering areas with solid prospects...

Overseas business is still in early investment phases, but I look forward to the future.

Also,although market capitalization is around 13 billion yen, they opted for the Prime market in the Tokyo Stock Exchange’s market segmentation.

The Prime market requires higher governance (a system to ensure fair decision-making and operations in corporate management), sonot only in Japan but globally, there is expectation for broader investments.

◆ Buyability

Finally, let’s look at the chart.

・Weekly

The high in September 2020 was around 3000 yen, and now it’s around 1000 yen, so it might be considered cheap.

The low was around 300 yen, so if you had bought then, you could have had a Ten-bagger.

However, there is still a strong possibility of another Ten-bagger.

◆ Result

Boom!

The result is quite above average.

It may take some time, but profits have been increasing year by year, andfor long-term investments such as a decade or more, this looks like a very good stock.

I felt that this company has a solid foundation, with a market cap still around 140 billion yen.

・3970 Innovation

◆ What kind of company?

First, looking at their homepage, I felt“It’s a bit hard to tell what the company does.”Simple design is good, but maybe they could better communicate what they actually do.

Main business appears to be“IT Trends,” a B2B purchasing matching platform.

And the corporate mission is “Changing the way we work.”

◆ Business content

Business content includes,

① Online media business (centered on “IT Trends”)

② IT solutions business (marketing, sales-support cloud)

③ Financial platform business (asset management advice, business succession M&A services)

These three.

Somehow, this is a bit tough for an amateur like me to fully grasp, haha.

◆ Performance

Regarding performance,this company does not publish results briefing videos.

This is a pretty big downside for me. Ideally, the CEO should report to shareholders quarterly.

Moreover, the earnings materials are

honestly very hard to read.

There’s no emphasis on losses, andthe format is very dry and straightforward.

I feel there may not be much to convey?Small details, but I think this is where a company’s attitude toward shareholders shows.

That said, the earnings are solid.

In addition, the first phase of the financial platform business, the IFA business (asset management advice), has moved from investment phase to growth phase, andfurther revenue growth is expected.

◆ Buyability

Finally, let’s look at the chart.

・Weekly

Also here,the high around June 2020 was about 6700 yen, and now around 2700 yen, so it looks reasonably buyable.

From the chart pattern, it also looks like a large double bottom, so there might be a chance.

◆ Result

The business does not feel particularly unique, and personally I didn’t find it very attractive.

Again,I've come to realize how important earnings briefing videos and materials are.