Q4 FY12/25 results update
Entering a structural upgrade cycle – Despite an improvement YoY in GPM, and sustained growth in LaKeel’s SaaS products, FY12/25 results were below expectations, reflecting slower-than-planned conversion of sales opportunities in H2 FY12/25 for LaKeel HR software. The outlook for FY12/26 is for the company to regroup and navigate the evolving AI landscape to support sustainable long-term growth. AI-related initiatives include research and development, product enhancements, and talent development. Key priority areas include the introduction of AI agents in the HR domain and the broader application of AI platforms within system development.
Recalibrating expectations
Refocusing on long-term strategic objectives – FY12/26 guidance points to low single-digit sales growth with a notable recovery YoY in OPM to a level akin to historic levels; we view this indicates a steadier performance for LaKeel HR license and related consulting work. However, OPM expansion may be limited, as the company actively invests in AI-related initiatives to accelerate its growth profile from FY12/27.
Valuations – The shares are trading at an estimated PER FY12/26 of 11.8x (on +33.0% EPS growth YoY) and a free cash flow yield of 15.3%. A planned ¥0.28bn share buyback (assumed to be completed at 100% by FY12/26) is expected to lift total shareholder return to 5.9%.
Full report available here
Description: LaKeel is a cloud technology company providing aPaaS and SaaS solutions to large enterprises. Its flagship products are LaKeel DX and LaKeel Apps
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