Intrinsic Value No.1 Co.,Ltd (3562.T)

• Previous Close: ¥1,845.00
• Intrinsic Value: ¥2,756.20
• Upside potential: +49%

Stock Valuation Context

Business Model And Market Position

No.1 Co., Ltd operates in the business equipment and supplies sector, specializing in the sale and maintenance of office automation (OA) and information security equipment. The company’s core offerings include copiers, multifunction machines, business phones, network security products, and file servers, catering primarily to corporate clients. Its diversified revenue streams extend to communication equipment sales, mobile and line services, mail-order agency operations, internet-related services, and advertising, positioning it as a multifaceted provider in Japan’s industrial landscape. The company’s market position is reinforced by its long-standing presence since 1989 and its headquarters in Tokyo, a hub for business activity. While it competes in a mature industry, its integration of security solutions and communication services differentiates it from traditional OA suppliers. The firm’s agency-based model and maintenance services provide recurring revenue, enhancing stability in a competitive market. However, its growth potential may be tempered by reliance on domestic demand and the gradual digitization of office workflows, which could reduce demand for physical equipment over time.

Revenue Profitability And Efficiency

No.1 Co., Ltd reported revenue of JPY 14.2 billion for FY2025, with net income of JPY 574 million, reflecting a net margin of approximately 4%. Operating cash flow stood at JPY 1.45 billion, indicating solid cash generation relative to earnings. Capital expenditures of JPY 273 million suggest moderate reinvestment needs, aligning with its asset-light service and distribution model.

Earnings Power And Capital Efficiency

The company’s diluted EPS of JPY 84.48 underscores its ability to translate revenue into shareholder returns, though its modest net income highlights margin pressures typical of the competitive OA industry. Operating cash flow coverage of net income at 2.5x demonstrates efficient working capital management, supported by its maintenance and service-oriented revenue streams.

Balance Sheet And Financial Health

No.1 Co., Ltd maintains a conservative balance sheet, with JPY 3.02 billion in cash and equivalents against JPY 1.61 billion in total debt, yielding a net cash position. This liquidity buffer supports its dividend policy and operational flexibility. The low debt-to-equity ratio suggests minimal financial risk, though the company’s small scale may limit access to growth capital.

Growth Trends And Dividend Policy

Growth appears steady but unspectacular, with revenue likely tied to Japan’s corporate demand cycles. The dividend payout of JPY 34.5 per share implies a yield of approximately 1.7% (assuming current share price levels), reflecting a commitment to returning capital despite modest earnings. Future growth may hinge on expanding higher-margin security and digital services.

Valuation And Market Expectations

With a market cap of JPY 13.2 billion, the company trades at a P/E of around 23x, suggesting modest growth expectations. Its beta of 0.36 indicates low volatility relative to the broader market, aligning with its stable but slow-growth profile. Investors likely value its niche positioning and dividend consistency over aggressive expansion.

Strategic Advantages And Outlook

No.1 Co., Ltd’s strengths lie in its diversified service offerings and entrenched customer relationships in Japan’s OA market. However, its reliance on hardware sales exposes it to technological obsolescence risks. Strategic shifts toward cybersecurity and digital services could offset these challenges, but execution remains key. The outlook is stable, with incremental growth dependent on operational efficiency and market retention.

Sources

Company filings, market data