| Valuation method | Value, ¥ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 122.21 | -58 |
| Intrinsic value (DCF) | 34330.47 | 11657 |
| Graham-Dodd Method | 79.14 | -73 |
| Graham Formula | 701.44 | 140 |
Gexeed Co., Ltd. (3719.T) is a Tokyo-based IT consulting firm specializing in business transformation, ERP implementation, and operational improvement services. Founded in 1964, the company serves Japanese enterprises with a comprehensive suite of solutions including JD Edwards, NetSuite Cloud ERP, and SAP implementation support. Gexeed differentiates itself through end-to-end consulting services spanning strategy development, process optimization (BPR), and post-go-live support, with niche expertise in finance, HR, and manufacturing workflows. As a domestic player in Japan's ¥5.3 trillion IT services market, Gexeed capitalizes on local regulatory knowledge and long client relationships. The firm's business incubation arm provides unique value through market entry support and interim management services for foreign companies expanding into Japan. With ¥1.42 billion in revenue (FY2024) and zero dividend policy, Gexeed focuses on reinvestment to capture demand from Japan's digital transformation wave, particularly among mid-market manufacturers and distributors seeking cloud ERP solutions.
Gexeed presents a specialized play on Japan's enterprise digitalization trends, trading at 4.8x revenue with modest profitability (10.4% net margin). The ¥7.1 billion market cap stock shows low beta (0.84) but concerning cash flow trends (-¥868M operating cash flow) due to working capital pressures. Competitive differentiation in JD Edwards/NetSuite implementation may be offset by reliance on Japan's stagnant corporate IT spend (1.2% CAGR projected 2023-28). Debt/EBITDA of 2.8x warrants monitoring given negative FCF. Attractive for investors seeking Japan-exposed IT services with turnaround potential, but requires scrutiny of SAP practice growth and working capital management improvements.
Gexeed occupies a middle-tier position in Japan's fragmented IT consulting market, differentiating through hybrid business/technology consulting and strong ERP implementation capabilities. The company's 60-year legacy provides domain expertise in Japanese accounting/tax systems - a critical advantage for JD Edwards and NetSuite deployments where localization matters. However, scale limitations (¥1.4B revenue vs. global peers) restrict R&D budgets for proprietary tools. Gexeed's SAP practice faces intense competition from larger SI vendors like NTT Data, while its NetSuite specialization aligns well with mid-market cloud adoption trends. The firm's consulting-led model (vs. offshore-heavy competitors) allows premium pricing but suffers margin pressure from Japan's IT labor shortage. Strategic partnerships with Oracle (JD Edwards) and NetSuite provide vendor credibility, but dependence on third-party platforms creates revenue concentration risks. Working capital inefficiencies (112 days receivable) lag industry benchmarks, suggesting need for operational improvements to compete effectively against leaner digital transformation providers.