| Valuation method | Value, ¥ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 455.53 | -49 |
| Intrinsic value (DCF) | 8041.10 | 798 |
| Graham-Dodd Method | 518.38 | -42 |
| Graham Formula | 688.89 | -23 |
CIRCULATION Co., Ltd. (7379.T) is a Tokyo-based consulting firm specializing in innovative business support services for freelancers, professionals, and enterprises. Founded in 2014, the company operates in Japan's dynamic consulting services sector, offering solutions like Pro-sharing Consulting for management problem-solving, Open Idea for new business start-ups, and FLEXY for CTO/engineer/designer support. CIRCULATION also runs Nomad Journal, a media platform promoting flexible workstyles, and Benefit Plan, a welfare system tailored for freelancers. With a market cap of ¥5.39 billion (as of latest data), the company serves a growing demand for agile workforce solutions in Japan's evolving gig economy. Its asset-light model and focus on high-margin consulting services position it uniquely in the Industrials sector's professional services niche.
CIRCULATION presents a specialized play on Japan's freelance economy with zero debt and ¥2.36 billion cash reserves, but investors should note its modest profitability (¥176.7M net income on ¥7.66B revenue) and lack of dividends. The stock's low beta (0.45) suggests defensive characteristics, though revenue concentration in Japan's consulting market limits diversification. Key attractions include innovative service offerings addressing structural labor market shifts, but risks include Japan's stagnant economic growth and potential margin pressure from wage inflation. The capital-light model and strong cash position provide flexibility for strategic acquisitions.
CIRCULATION occupies a unique niche bridging traditional consulting and gig economy platforms in Japan. Its competitive advantage stems from: 1) First-mover positioning in Japanese freelance-focused consulting with proprietary offerings like Benefit Plan; 2) Asset-light model requiring minimal capex (just ¥-9M annually); 3) Dual revenue streams from corporate clients and individual professionals. However, the company faces fragmentation pressures - while larger consultancies like Nomura Research Institute dominate enterprise strategy work, CIRCULATION's specialized freelance solutions lack scale (only ¥7.7B revenue). Its cash-rich balance sheet (43% of market cap) provides acquisition firepower to consolidate smaller players. Differentiation through Nomad Journal's media platform creates branding moat, but international players like Upwork could disrupt if they expand Japanese operations. The company's valuation appears reasonable at 0.7x revenue, but must demonstrate consistent profitability (current 2.3% net margin) to justify premium to traditional consultancies.