Palemo Holdings Co.,Ltd. (2778) AI Stock Analysis

• Market Cap: ¥1.83B
• Dividend Yield: N/A
• Average Volume (3M): 71.97K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.89
• Revenue Growth: -6.40%
• EPS Growth: -590.11%
• Country: JP
• Employees: 135
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Retail
• EPS (TTM): -8.11
• Shares Outstanding: 12,051,384
• 10 Day Avg. Volume: 66,600
• 30 Day Avg. Volume: 71,970
• PEG Ratio: 0.31
• Price to Book (P/B): 1.03
• Price to Sales (P/S): 0.11
• P/FCF Ratio: 6.48
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 52 Neutral
• Price Target: ¥159.00 ▲(24.22% Upside)
• Action: Reiterated Date: 10/01/25
• Date: Action: Reiterated 10/01/25

Palemo Holdings Co., Ltd. faces significant financial and technical challenges, with high leverage and negative earnings impacting its valuation. While there are improvements in cash flow, the stock's bearish technical indicators and lack of earnings make it a risky investment. Continued efforts in cost management and revenue growth are crucial for recovery.

Positive Factors

Free cash flow turned positive in 2025

Free cash flow turning positive is a durable sign the company can fund operations, capex and interest without relying on new equity. A favorable free cash flow to net income ratio indicates real cash generation despite accounting losses, supporting leverage reduction or reinvestment over months.

Diversified investment holding model

A diversified holding structure spanning real estate, telecom and technology provides multiple revenue streams (management fees, leasing, services) and the ability to reallocate capital across subsidiaries. This structural mix reduces single-market exposure and can stabilize cash flows over time.

Relatively stable equity base (22.6% equity ratio)

A positive equity ratio around 22.6% gives a tangible capital buffer that helps absorb losses and maintain creditor confidence. While leverage exists, a stable equity base lowers immediate insolvency risk and provides structural capacity to execute gradual deleveraging or restructuring initiatives.

Negative Factors

High leverage / elevated debt-to-equity

Elevated debt-to-equity increases fixed obligations and reduces financial flexibility, making the company more sensitive to cash flow fluctuations. Over the medium term, high leverage constrains investment, raises refinancing risk, and can force asset sales or costly capital raises if cash generation falters.

Negative profitability and return on equity

Negative net margins and ROE signal the business is not generating returns on shareholder capital, eroding retained earnings and limiting internal funding for growth. Persistent unprofitability can necessitate restructuring, asset disposals or dilution, impairing long-term value creation.

Multi-year revenue decline

Sustained revenue decline reduces scale and bargaining power, pressures gross margins and operating leverage, and limits cash flow expansion. Without reversing top-line erosion, margin recovery and deleveraging efforts will be harder to sustain, constraining structural recovery prospects.

Palemo Holdings Co.,Ltd. Business Overview & Revenue Model

Company Description

Palemo Holdings Co.,Ltd. owns and operates a chain of specialty stores for women's apparel in Japan. It is also involved in the delivery agency business. The company was formerly known as Palemo Co., Ltd. and changed its name to Palemo Holdings Co.,Ltd. in August 2017. The company was incorporated in 1976 and is headquartered in Nagoya, Japan.

How the Company Makes Money

Palemo Holdings Co., Ltd. generates revenue primarily through the sale of fashion apparel and accessories in its retail stores. The company operates numerous outlets across Japan, focusing on high-traffic areas such as shopping malls to maximize customer footfall. Revenue is driven by direct consumer purchases, and the company may also leverage seasonal promotions and marketing campaigns to boost sales. Additionally, partnerships with popular fashion brands and suppliers ensure a steady supply of trendy products, contributing to consistent earnings.

Palemo Holdings Co.,Ltd. Financial Statement Overview

Summary

Palemo Holdings Co., Ltd. is navigating through financial challenges with some signs of improvement in cash flow and a stabilizing equity position. However, high leverage and inconsistent profitability remain concerns. Continued focus on revenue growth and cost management will be essential for sustained recovery.

Income Statement

Palemo Holdings Co., Ltd. has faced a significant revenue decline from 2020 to 2025. The most recent year shows a negative net profit margin of -0.32% and a declining gross profit margin, reflecting challenges in cost management and profitability. However, there are improvements compared to the negative earnings in previous years, indicating some recovery efforts.

Balance Sheet

The company's debt-to-equity ratio remains high, posing leverage-related risks. Despite a positive equity ratio of 22.6%, the return on equity is negative due to losses. Although the equity base is relatively stable, overall financial health is weakened by consistent liabilities exceeding assets.

Cash Flow

Operating cash flow has improved over the years, and free cash flow has turned positive in 2025, demonstrating better cash management. The free cash flow to net income ratio is favorable, indicating that the company can generate cash despite accounting losses.

Breakdown	TTM	Feb 2025	Feb 2024	Feb 2023	Feb 2022	Feb 2021
Income Statement
Total Revenue	18.41B	15.04B	15.94B	17.51B	17.91B	18.26B
Gross Profit	9.71B	7.90B	8.28B	9.14B	9.35B	9.39B
EBITDA	317.82M	164.02M	741.92M	750.85M	-1.02B	-1.50B
Net Income	-7.56M	-47.63M	411.77M	562.00M	-1.39B	-1.88B
Balance Sheet
Total Assets	7.03B	6.99B	8.43B	8.77B	9.22B	9.99B
Cash, Cash Equivalents and Short-Term Investments	2.63B	2.04B	2.95B	3.04B	2.21B	2.14B
Total Debt	1.79B	1.93B	2.92B	3.49B	3.49B	3.35B
Total Liabilities	5.35B	5.41B	6.78B	7.52B	8.80B	8.18B
Stockholders Equity	1.68B	1.58B	1.64B	1.25B	418.48M	1.81B
Cash Flow
Free Cash Flow	0.00	250.40M	428.84M	10.76M	-401.89M	-1.42B
Operating Cash Flow	0.00	363.48M	565.81M	207.26M	-158.58M	-1.16B
Investing Cash Flow	0.00	-218.86M	-80.72M	362.78M	107.19M	76.94M
Financing Cash Flow	0.00	-1.05B	-584.75M	264.96M	125.43M	970.67M

Palemo Holdings Co.,Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 128.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2778, the sentiment is Positive. The current price of 128 is below the 20-day moving average (MA) of 151.60, below the 50-day MA of 143.90, and below the 200-day MA of 144.79, indicating a bullish trend. The MACD of 2.15 indicates Positive momentum. The RSI at 56.21 is Neutral, neither overbought nor oversold. The STOCH value of 34.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:2778.

Palemo Holdings Co.,Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2792	72 Outperform	¥41.55B	12.14	―	3.62%	-0.98%	-29.86%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
8013	57 Neutral	¥2.44B	151.11	―	―	2.54%	―
2778	52 Neutral	¥1.83B	-26.65	―	―	-6.40%	-590.11%
7445	50 Neutral	¥11.82B	-17.84	-111.30%	―	-27.51%	96.20%
7603	47 Neutral	¥3.64B	-1.53	―	―	-7.88%	-11.22%
3189	40 Underperform	¥9.38B	-1.33	―	―	-34.49%	―