Intrinsic Value Jedat Inc. (3841.T)

• Previous Close: ¥1,285.00
• Intrinsic Value: ¥949.27
• Upside potential: -26%

Stock Valuation Context

Business Model And Market Position

Jedat Inc. operates in the electronic design automation (EDA) software industry, specializing in tools for circuit and layout design. The company serves a global clientele with solutions for LSI, flat panel display, fine pattern, and PCB/package design, alongside its flagship SX-Meister EDA system. Its analog and display solutions further diversify its product portfolio, catering to specialized segments within semiconductor and display manufacturing. Positioned as a niche player, Jedat competes by offering precision tools tailored for complex design workflows, differentiating itself through domain expertise and reliability in high-stakes engineering environments. The company’s focus on SoC and advanced display technologies aligns with growing demand for miniaturization and high-performance electronics, though it faces competition from larger EDA providers. With a foundation dating back to 1980, Jedat has cultivated long-term relationships in Japan’s tech sector while expanding internationally.

Revenue Profitability And Efficiency

Jedat reported revenue of ¥2.06 billion for FY2024, with net income of ¥328.7 million, reflecting a net margin of approximately 16%. Diluted EPS stood at ¥85.39, though operating cash flow was negative at ¥-65.2 million, likely due to working capital adjustments. The absence of debt and a cash reserve of ¥3.49 billion underscore prudent financial management, but the negative operating cash flow warrants scrutiny regarding recurring profitability.

Earnings Power And Capital Efficiency

The company’s earnings power is driven by its high-margin software licensing and design services, evidenced by its robust net income relative to revenue. Capital efficiency is strong, with no debt and minimal capital expenditures (¥-2.9 million), suggesting a asset-light model. However, the negative operating cash flow indicates potential timing disparities in revenue recognition or cash collection.

Balance Sheet And Financial Health

Jedat’s balance sheet is exceptionally healthy, with ¥3.49 billion in cash and equivalents and zero debt, providing significant liquidity and flexibility. The lack of leverage and substantial cash reserves position the company to weather economic downturns or invest in R&D, though the stagnant operating cash flow could signal underlying operational challenges if sustained.

Growth Trends And Dividend Policy

Revenue growth trends are not explicitly provided, but the company’s dividend payout of ¥40 per share suggests a shareholder-friendly policy, yielding approximately 1.9% based on the current market cap. The dividend, coupled with a debt-free structure, indicates a focus on returning capital to investors, though reinvestment for growth may be limited given the modest scale of operations.

Valuation And Market Expectations

With a market cap of ¥5.08 billion, Jedat trades at a P/E of ~15.4x based on FY2024 earnings, reflecting moderate expectations for a niche software firm. The negative beta (-0.057) implies low correlation with broader markets, possibly due to its specialized focus, but may also indicate limited investor interest or liquidity concerns.

Strategic Advantages And Outlook

Jedat’s deep expertise in EDA tools for specialized applications provides a competitive moat, particularly in Japan’s tech ecosystem. The company’s cash-rich balance sheet offers strategic optionality, but growth hinges on expanding its international footprint or innovating in high-growth segments like AI-driven design. Near-term challenges include improving cash flow consistency and scaling against larger EDA incumbents.

Sources

Company filings, market data