Commerce One Holdings Inc. provides solutions for e-commerce business operators to start and operate their businesses. The company provides e-commerce site construction and operation services; sales management and inventory management system for the e-commerce business; and management support tools, such as EC site authentication service and order trend display based on data analysis. The company was incorporated in 2006 and is based in Chiyoda, Japan.

Japan

Commerce One Holdings Inc.

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 good and slightly above its peers. At the same time, the average five-year yield has been significantly lower, at almost zero. The company distributes nearly all its profit as dividends (payout ratio above 90%, a negative factor). It will not be easy to sustain such an extreme payout ratio. It may also indicate a company's lack of profitable growth opportunities, which suggests doubtful prospects. 

4496.T reported revenue of JPY 3 693mn in the last 12 months, up 0% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 59% from FY24 to JPY 12.69. Market expects EPS to reach JPY 0.00 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 10ppts and its growth decelerated by 5ppts 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 neither favourable nor unfavourable.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 18.1% in the last 12 months, a decline from 20.8% in FY24. 

Historically, 4496.T has reported average net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 2.4%, down from 6.0% in FY24. 

Commerce One Holdings Inc. reported a return on equity (RoE) of 3.5% in the last 12 months, down from 8.3% in FY24. The market consensus projects an RoE of 0.0% in FY25, again behind its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 3.3%, below the peers. The consensus estimate for FY25 for RoCE is 0.0%, again behind the peers. 

Another important profitability metric, return on assets (RoA), amounted to 2.5% in the last 12 months, a decrease from 6.2% in FY24. The market analysts predict that RoA will be 0.0% in FY25, again weaker than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.5 in the past several years. This ratio implies a strong 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.

4496.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 may be 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. 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 robust profitability, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, 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, and poor working capital management.

In highly turbulent market conditions, 4496.T is volatile. In other words, the stock will fall much 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 large. 

In normal market circumstances, 4496.T is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from significant to substantial. 

Considering past and projected metrics, the stock is 'cheaper' than its peers. In particular, the stock is overpriced on P/E, 'cheap' on EV/EBITDA, undervalued on P/FCF. 

Commerce One Holdings Inc.

¥ 796

4

Commerce One Holdings Inc.

¥ 796

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

¥ 796

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