Change (TSE:3962) - Share price, News & Analysis

Q: What is the Fair Price of 3962 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

3962 (¥2171) is trading below our estimate of [[fair value]] (¥3421.25)

3962 fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	5/6
Past Performance	1/6
Financial Health	5/6
Dividends	0/6

3962 Stock Overview

Change Inc. provides IT human resources development training services in Japan.

Rewards

Trading at 36.5% below our estimate of its fair value

Earnings are forecast to grow 21.36% per year

Revenue grew by 6.2% over the past year

Risk Analysis

Volatile share price over the past 3 months

Change Competitors

Future

TSE:4722

JP¥158.3b

DTS

TSE:9682

JP¥154.6b

Digital Garage

TSE:4819

JP¥186.4b

NSD

TSE:9759

JP¥192.5b

Price History & Performance

Summary of all time highs, changes and price drops for Change
Historical stock prices
Current Share Price	JP¥2,171.00
52 Week High	JP¥2,557.00
52 Week Low	JP¥1,303.00
Beta	0.81
1 Month Change	7.26%
3 Month Change	26.07%
1 Year Change	-4.02%
3 Year Change	372.21%
5 Year Change	360.69%
Change since IPO	1,158.55%

Shareholder Returns

	3962	JP IT	JP Market
7D	0.05%	-0.8%	1.2%
1Y	-4.0%	-0.4%	-0.2%

Return vs Industry: 3962 underperformed the JP IT industry which returned -0.4% over the past year.

Return vs Market: 3962 underperformed the JP Market which returned -0.2% over the past year.

Price Volatility

Is 3962's price volatile compared to industry and market?
3962 volatility
3962 Average Weekly Movement	7.6%
IT Industry Average Movement	4.8%
Market Average Movement	3.8%
10% most volatile stocks in JP Market	7.8%
10% least volatile stocks in JP Market	2.0%

Stable Share Price: 3962 is more volatile than 75% of JP stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: 3962's weekly volatility (8%) has been stable over the past year, but is still higher than 75% of JP stocks.

About the Company

Founded	Employees	CEO	Website
2003	328	Hiroshi Fukudome	https://www.change-jp.com

Change Inc. provides IT human resources development training services in Japan. It offers training services utilizing libraries and basic technologies of various algorithms, such as artificial intelligence, robotics, Internet of Things, voice internet, mobility, big data, cloud, cyber security, and new-IT transformation projects. The company was founded in 2003 and is based in Tokyo, Japan.

Change Fundamentals Summary

How do Change's earnings and revenue compare to its market cap?
3962 fundamental statistics
Market Cap	JP¥157.04b
Earnings (TTM)	JP¥3.73b
Revenue (TTM)	JP¥15.53b

42.1x

P/E Ratio

10.1x

P/S Ratio

Is 3962 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
3962 income statement (TTM)
Revenue	JP¥15.53b
Cost of Revenue	JP¥4.38b
Gross Profit	JP¥11.15b
Other Expenses	JP¥7.42b
Earnings	JP¥3.73b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Aug 15, 2022

Earnings per share (EPS)	51.56
Gross Margin	71.82%
Net Profit Margin	24.02%
Debt/Equity Ratio	4.1%

How did 3962 perform over the long term?

See historical performance and comparison

Dividends

0.3%

Current Dividend Yield

9%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is 3962 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 3962?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 3962. This is calculated by dividing 3962's market cap by their current preferred multiple.
What is 3962's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	JP¥157.04b

3962 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	8.4x
Enterprise Value/EBITDA	22.3x
PEG Ratio	2x

Price to Earnings Ratio vs Peers

How does 3962's PE Ratio compare to its peers?

3962 PE Ratio vs Peers

The above table shows the PE ratio for 3962 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	17.1x
4722 Future	19.3x	-3.4%	JP¥158.3b
9682 DTS	19.6x	4.7%	JP¥154.6b
4819 Digital Garage	5.4x	-11.1%	JP¥186.4b
9759 NSD	24x	7.3%	JP¥192.5b
3962 Change	42.1x	21.4%	JP¥157.0b

Price-To-Earnings vs Peers: 3962 is expensive based on its Price-To-Earnings Ratio (42.1x) compared to the peer average (17.1x).

Price to Earnings Ratio vs Industry

How does 3962's PE Ratio compare vs other companies in the JP IT Industry?

Price-To-Earnings vs Industry: 3962 is expensive based on its Price-To-Earnings Ratio (42.1x) compared to the JP IT industry average (18.1x)

Price to Earnings Ratio vs Fair Ratio

What is 3962's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

3962 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	42.1x
Fair PE Ratio	27x

Price-To-Earnings vs Fair Ratio: 3962 is expensive based on its Price-To-Earnings Ratio (42.1x) compared to the estimated Fair Price-To-Earnings Ratio (27x).

Share Price vs Fair Value

What is the Fair Price of 3962 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 3962 (¥2171) is trading below our estimate of fair value (¥3421.25)

Significantly Below Fair Value: 3962 is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

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Future Growth

How is Change forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

Future Growth Score

5/6

Future Growth Score 5/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

21.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 3962's forecast earnings growth (21.4% per year) is above the savings rate (0.04%).

Earnings vs Market: 3962's earnings (21.4% per year) are forecast to grow faster than the JP market (8.4% per year).

High Growth Earnings: 3962's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: 3962's revenue (19.1% per year) is forecast to grow faster than the JP market (4.3% per year).

High Growth Revenue: 3962's revenue (19.1% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 3962's Return on Equity is forecast to be high in 3 years time (21%)

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Past Performance

How has Change performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-14.8%

Last years earnings growth

Earnings and Revenue History

Quality Earnings: 3962 has high quality earnings.

Growing Profit Margin: 3962's current net profit margins (24%) are lower than last year (29.9%).

Past Earnings Growth Analysis

Earnings Trend: Insufficient data to determine if 3962's year-on-year earnings growth rate was positive over the past 5 years.

Accelerating Growth: 3962's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 3962 had negative earnings growth (-14.8%) over the past year, making it difficult to compare to the IT industry average (17.9%).

Return on Equity

High ROE: 3962's Return on Equity (10.7%) is considered low.

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Financial Health

How is Change's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: 3962's short term assets (¥35.7B) exceed its short term liabilities (¥5.9B).

Long Term Liabilities: 3962's short term assets (¥35.7B) exceed its long term liabilities (¥1.2B).

Debt to Equity History and Analysis

Debt Level: 3962 has more cash than its total debt.

Reducing Debt: Insufficient data to determine if 3962's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: 3962's debt is well covered by operating cash flow (301.2%).

Interest Coverage: 3962's interest payments on its debt are well covered by EBIT (145.8x coverage).

Balance Sheet

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Dividend

What is Change current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

0.32%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: 3962's dividend (0.32%) isn’t notable compared to the bottom 25% of dividend payers in the JP market (1.63%).

High Dividend: 3962's dividend (0.32%) is low compared to the top 25% of dividend payers in the JP market (3.59%).

Stability and Growth of Payments

Stable Dividend: 3962 is not paying a notable dividend for the JP market, therefore no need to check if payments are stable.

Growing Dividend: 3962 is not paying a notable dividend for the JP market, therefore no need to check if payments are increasing.

Earnings Payout to Shareholders

Earnings Coverage: 3962 is not paying a notable dividend for the JP market.

Cash Payout to Shareholders

Cash Flow Coverage: 3962 is not paying a notable dividend for the JP market.

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Management

How experienced are the management team and are they aligned to shareholders interests?

6.7yrs

Average management tenure

CEO

Hiroshi Fukudome (46 yo)

6.67yrs

Tenure

Mr. Hiroshi Fukudome serves as Executive Officer and President at Change Inc. He served as an Executive President of Change Inc. Mr. Fukudome served as Chief of Research & Development Unit at Change Inc. s...

Leadership Team

Experienced Management: 3962's management team is seasoned and experienced (6.7 years average tenure).

Board Members

Experienced Board: 3962's board of directors are considered experienced (6.6 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/14 00:00
End of Day Share Price	2022/08/12 00:00
Earnings	2022/03/31
Annual Earnings	2022/03/31