Computer Management Co., Ltd. provides system support solutions. The company offers services on system development, financial/medical system development, and helpdesk business process outsourcing services; and system infrastructure solutions, including consulting, design, implementation, operation, and maintenance solutions. It also provides ERP solutions on SAP S4 HANA for large enterprises; SAP Business ByDesign for medium-size enterprises; and SAP Business One for small and medium-sized enterprises. The company was founded in 1981 and is headquartered in Osaka, Japan.

Japan

Computer Management Co., Ltd.

Technology

The company pays dividends on rare occasions. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been moderate and on par with its peers. 

4491.T reported revenue of JPY 7 903mn in the last 12 months, up 3% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 19% from FY24 to JPY 194.52. Market expects EPS to reach JPY 204.30 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 55ppts and its growth accelerated by 38ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 6.9% in the last 12 months, up from 6.1% in FY24. 

Historically, 4491.T has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 5.0%, a growth from 4.3% in FY24. 

Another important profitability metric, return on assets (RoA), amounted to 7.9% in the last 12 months, an increase from 7.2% in FY24. The market analysts predict that RoA will be 7.5% in FY25, though below its peers in this period. 

In the last 12 months, the return on capital employed (RoCE) grew to 9.7%, below the peers. The consensus estimate for FY25 for RoCE is 12.0%, again behind the peers. 

Computer Management Co., Ltd. reported a return on equity (RoE) of 11.4% in the last 12 months, up from 10.4% in FY24. The market consensus projects an RoE of 10.8% in FY25, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.1 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

4491.T has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is very unstable and becomes extremely unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note low margin volatility, adequate interest coverage, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, and poor working capital management.

In highly turbulent market conditions, 4491.T is moderately volatile. In other words, the stock will fall more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be moderate. 

In normal market circumstances, 4491.T is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. 

From both historical and forecast perspectives, the stock is considerably underpriced compared to similar stocks. Specifically, the stock is 'cheap' on P/E, undervalued on EV/EBITD. 

Computer Management Co., Ltd.

¥ 2490

5

Computer Management Co., Ltd.

¥ 2490

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

¥ 2490

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