Systems Engineering Consultants Co., Ltd. (3741) AI Stock Analysis

• Market Cap: ¥35.32B
• Dividend Yield: 1.74%
• Average Volume (3M): 124.77K
• Price to Earnings (P/E): 25.1
• Beta (1Y): 0.95
• Revenue Growth: 21.97%
• EPS Growth: 15.89%
• Country: JP
• Employees: 347
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 39.32
• Shares Outstanding: 10,240,000
• 10 Day Avg. Volume: 118,140
• 30 Day Avg. Volume: 124,770
• PEG Ratio: -0.44
• Price to Book (P/B): 2.47
• Price to Sales (P/S): 2.24
• P/FCF Ratio: -83.84
• 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: 75 Outperform
• Price Target: ¥3,881.00 ▲(24.39% Upside)

The score is driven primarily by strong financial fundamentals (rapid revenue growth, solid margins, and very low leverage), offset by the recent deterioration in cash generation. Technically the trend is positive, but overbought signals increase short-term risk. Valuation is not cheap (P/E ~24) and the dividend yield is modest, which limits upside from a valuation standpoint.

Positive Factors

Revenue Growth

Sustained ~20% revenue growth indicates durable demand for the firm's engineering and systems-integration services across sectors. This scale boost supports long-term client relationships, recurring project pipelines and reinvestment in R&D to maintain competitive offerings.

Profitability and Margins

Healthy gross and operating margins reflect strong pricing power and efficient project execution in high-value consulting work. Margin durability supports internal funding for innovation, resilience to cost fluctuations, and sustained returns even if growth moderates.

Conservative Balance Sheet

Exceptionally low leverage and high equity financing reduce financial risk and provide flexibility to fund strategic investments or weather downturns without risking solvency, enabling steady long-term execution of multi-year contracts and R&D programs.

Negative Factors

Weakening Cash Generation

Profitability has not translated into cash recently; negative free cash flow can limit ability to fund capex, hire or finance growth internally. Over months this tension may force slower scaling, increased working-capital financing, or reliance on external funding.

Project-based Revenue Volatility

Heavy reliance on project contracts creates lumpy revenue and timing risk: public procurement cycles and large project schedules can delay recognition and cash receipts. This structural cadence complicates forecasting and can amplify margin and staffing swings.

Limited Headcount Scale

A relatively small workforce for a multi-sector systems integrator may constrain capacity to scale large or concurrent projects without ramping hiring or subcontracting. That scaling need can raise fixed costs, execution risk, and dependency on key technical staff.

Systems Engineering Consultants Co., Ltd. Business Overview & Revenue Model

Company Description

Systems Engineering Consultants Co.,LTD., a software development company, provides real-time software solutions in mobile networking, Internet technology, and public infrastructure fields in Japan. Its mobile networking business develops embedded software for various mobile devices, including smartphones and tablet PCs, mobile terminals, and in-vehicle information terminals. The company's Internet technology business develops embedded software for contactless IC cards and other application technologies, such as IoT-related technologies; and real-time technologies, including augmented reality, virtual reality, mixed reality, XML technologies, and cloud systems. Its public infrastructure business develops application technologies for public infrastructure fields, such as advanced transportation systems, defense-related systems, location information management systems, and systems for use in medical, environmental energy, and government offices. The company's space, robotics, and advanced technologies business offers embedded systems for scientific satellites, planetary probes, and data analysis systems, as well as researches and develops robots; and provides development and consulting services on various uses of robotic systems. Its products also include RTMSafety, a robot middleware; Rtino, an indoor autonomous mobile robot software; and Rtrilo, a computer vision software for robots and other machines. The company was incorporated in 1970 and is headquartered in Tokyo, Japan.

How the Company Makes Money

The company generates revenue primarily through consulting fees for its engineering services, which include system design, implementation, and ongoing support. Key revenue streams also include project-based contracts with public and private sector clients, as well as maintenance and support services for existing systems. Additionally, Systems Engineering Consultants Co., Ltd. may engage in strategic partnerships with technology providers to offer bundled services, further enhancing their service offerings and market reach. The company's focus on high-value, long-term contracts with clients in critical sectors, along with its reputation for quality and expertise, are significant factors contributing to its earnings.

Systems Engineering Consultants Co., Ltd. Financial Statement Overview

Summary

Strong profitability and growth (revenue +20.6%, healthy EBIT margin 17.4% and net margin 13.1%) and an exceptionally conservative balance sheet (debt-to-equity 0.004, equity ratio 79.2%, ROE 14.4%). Score is tempered by weakening operating cash flow and negative recent free cash flow.

Income Statement

The company has demonstrated strong revenue growth with a 20.6% increase from the previous year, reflecting robust market demand and effective sales strategies. Gross profit margin and EBIT margin stand at 29.8% and 17.4% respectively, indicating efficient cost management and operational profitability. The net profit margin is also healthy at 13.1%, showing solid bottom-line performance. Overall, the income statement reflects a company with increasing revenue and profitability, positioning it well within the competitive software industry.

Balance Sheet

The balance sheet is strong with a low debt-to-equity ratio of 0.004, indicating minimal leverage and sound financial stability. The equity ratio of 79.2% suggests a high proportion of assets financed by equity, further strengthening the company's financial position. Return on equity is a solid 14.4%, showcasing effective utilization of shareholder funds. The company's high equity and low debt levels mitigate potential financial risks, providing a stable foundation for future growth.

Cash Flow

The cash flow statement shows a decline in operating cash flow, resulting in negative free cash flow in the most recent period. This is a concern as it suggests cash flow constraints despite the company's profitability. However, the free cash flow to net income ratio was positive in previous years, indicating potential for cash flow recovery. Overall, while the cash flow position requires improvement, historical performance suggests resilience.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	10.42B	10.30B	8.53B	7.49B	6.56B	6.53B
Gross Profit	3.06B	3.07B	2.55B	2.24B	1.97B	1.85B
EBITDA	1.83B	1.94B	1.58B	1.32B	1.14B	1.08B
Net Income	1.30B	1.34B	1.11B	878.83M	780.30M	727.68M
Balance Sheet
Total Assets	10.68B	11.78B	10.11B	9.19B	8.43B	7.94B
Cash, Cash Equivalents and Short-Term Investments	5.60B	2.23B	2.97B	3.08B	3.23B	2.85B
Total Debt	326.75M	36.00M	36.00M	36.00M	36.00M	36.00M
Total Liabilities	1.66B	2.45B	1.71B	1.58B	1.33B	1.36B
Stockholders Equity	9.01B	9.33B	8.40B	7.60B	7.09B	6.58B
Cash Flow
Free Cash Flow	0.00	-275.22M	345.47M	431.18M	629.42M	-76.76M
Operating Cash Flow	0.00	-250.49M	384.07M	526.79M	642.95M	-52.13M
Investing Cash Flow	0.00	-40.97M	-139.18M	-303.57M	28.72M	-40.65M
Financing Cash Flow	0.00	-445.43M	-352.99M	-381.51M	-290.70M	-423.19M

Systems Engineering Consultants Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3120.00
• 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:3741, the sentiment is Positive. The current price of 3120 is below the 20-day moving average (MA) of 3445.25, below the 50-day MA of 3128.22, and above the 200-day MA of 2618.43, indicating a bullish trend. The MACD of 108.29 indicates Positive momentum. The RSI at 55.42 is Neutral, neither overbought nor oversold. The STOCH value of 20.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:3741.

Systems Engineering Consultants Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4493	78 Outperform	¥18.09B	26.25	―	0.17%	31.39%	13.12%
3741	75 Outperform	¥35.32B	25.12	―	1.74%	21.97%	15.89%
3992	66 Neutral	¥22.90B	24.21	―	2.26%	5.07%	10.80%
3850	65 Neutral	¥17.68B	21.93	―	0.91%	15.28%	60.07%
4847	65 Neutral	¥25.00B	19.43	―	3.62%	6.02%	-11.83%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Systems Engineering Consultants Co., Ltd. Corporate Events

Systems Engineering Consultants Reports Strong Half-Year Financial Results and Announces Stock Split

Systems Engineering Consultants Co., Ltd. reported an 18.3% increase in net sales for the six months ending September 30, 2025, compared to the previous year. The company also implemented a 2-for-1 stock split effective October 1, 2025, impacting earnings per share calculations and future dividend forecasts.

The most recent analyst rating on (JP:3741) stock is a Buy with a Yen3056.00 price target. To see the full list of analyst forecasts on Systems Engineering Consultants Co., Ltd. stock, see the JP:3741 Stock Forecast page.

Systems Engineering Consultants Revises Financial Forecast Upward

Systems Engineering Consultants Co., Ltd. has revised its financial forecast for the six months ending September 30, 2025, due to better-than-expected sales and profits driven by increased development activities in key sectors. The company’s full-year forecast remains unchanged, indicating stable performance aligned with their strategic plan.

The most recent analyst rating on (JP:3741) stock is a Buy with a Yen2827.00 price target. To see the full list of analyst forecasts on Systems Engineering Consultants Co., Ltd. stock, see the JP:3741 Stock Forecast page.