CHANGE Holdings,Inc. (3962) AI Stock Analysis

• Market Cap: ¥69.42B
• Dividend Yield: 1.47%
• Average Volume (3M): 422.31K
• Price to Earnings (P/E): 3.2
• Beta (1Y): 1.09
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: JP
• Employees: 1,069
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 76.47
• Shares Outstanding: 73,852,360
• 10 Day Avg. Volume: 464,000
• 30 Day Avg. Volume: 422,306
• PEG Ratio: 0.14
• Price to Book (P/B): 2.13
• Price to Sales (P/S): 1.89
• P/FCF Ratio: 11.47
• 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: 69 Neutral
• Price Target: ¥1,046.00 ▲(9.53% Upside)
• Action: N/A Date: 03/18/26
• Date: Action: N/A 03/18/26

The score is driven primarily by solid financial performance (healthy margins and strong current free cash flow) and very attractive valuation (low P/E and a dividend). These positives are tempered by weak technical signals, with the stock trading below key long-term moving averages and negative MACD indicating soft momentum.

Positive Factors

High Structural Profitability

Sustained high gross (~55%) and EBIT (~21.6%) margins reflect durable pricing power and operational scale in consulting/IT services. Such margin structure supports reinvestment, resilience through cycles and the ability to fund growth initiatives and shareholder returns over the medium term.

Strong Free Cash Flow Conversion

TTM free cash flow of ¥12.4B and near-1.0 conversion of earnings into cash indicate effective cash generation from operations. Durable FCF enhances financial flexibility for capex, M&A, dividends or deleveraging and reduces reliance on external financing over the next several quarters.

Market Position in DX Services

Core focus on digital transformation for corporate and public-sector clients aligns with a structural industry tailwind toward IT modernization. Consulting plus implementation services create sticky, recurring relationships and multi-year project pipelines that support steady revenue opportunity.

Negative Factors

Margin Compression

A notable decline in net margin from FY2025 to TTM implies rising costs, adverse mix shifts or one-off impacts reducing bottom-line conversion. If persistent, this erodes cash flow and reinvestment capacity, pressuring long-term profitability and strategic flexibility.

Historic Cash-Flow Volatility

Despite strong recent FCF, historical swings — including negative operating/free cash flow in FY2023 — indicate uneven project timing or client payment patterns. Such volatility undermines predictability of funding for growth, dividends and debt servicing across multi-quarter horizons.

Rising Leverage

Higher absolute debt versus earlier years increases sensitivity to operating setbacks. Even with recent improvement, a ~0.66 D/E ratio raises fixed-cost burdens and reduces financial flexibility, making the firm more exposed to margin or cash-flow deterioration during tougher market periods.

CHANGE Holdings,Inc. Business Overview & Revenue Model

Company Description

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.

How the Company Makes Money

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CHANGE Holdings,Inc. Financial Statement Overview

Summary

Strong scale and profitability (TTM revenue ¥53.0B, ~55% gross margin, ~21.6% EBIT margin) with solid free cash flow (¥12.4B) and good earnings-to-cash conversion (~0.99). Offsetting this are signs of margin compression versus the latest annual period and historically volatile cash flow, plus higher leverage than earlier years despite improvement year-over-year.

Income Statement

TTM (Trailing-Twelve-Months) revenue is ¥53.0B with strong reported revenue growth (1.603), and profitability remains healthy with ~55% gross margin and ~21.6% EBIT margin. However, margins and earnings quality have softened versus the most recent annual period (FY2025 net margin ~16.2% vs TTM ~11.6%), suggesting higher costs, mix shift, or one-offs pressuring bottom-line conversion despite continued scale.

Balance Sheet

The company shows a solid equity base (TTM equity ¥47.3B vs assets ¥126.4B) and a reasonable leverage profile for the sector, with debt-to-equity at ~0.66 (improved from ~0.84 in the latest annual report). That said, debt has risen materially versus earlier years, and the higher leverage increases sensitivity to operating volatility compared with the historically low-debt profile.

Cash Flow

Cash generation is currently strong: TTM operating cash flow is ¥12.6B and free cash flow is ¥12.4B, with free cash flow nearly matching net income (~0.99), indicating good earnings-to-cash conversion. The main watch-out is that cash flow has been volatile historically (including negative operating/free cash flow in FY2023), and the provided operating cash flow coverage ratio remains low in TTM (0.289), implying weaker coverage by that specific measure despite the strong absolute free cash flow.

Breakdown	TTM	Mar 2024	Mar 2023	Mar 2023	Sep 2021	Sep 2020
Income Statement
Total Revenue	52.98B	46.39B	37.02B	20.02B	20.28B	10.54B
Gross Profit	29.24B	24.81B	22.26B	12.17B	15.74B	7.83B
EBITDA	14.52B	15.01B	11.43B	6.34B	9.85B	4.78B
Net Income	6.16B	7.53B	4.26B	3.86B	6.19B	2.05B
Balance Sheet
Total Assets	126.35B	104.79B	93.83B	52.94B	42.73B	17.09B
Cash, Cash Equivalents and Short-Term Investments	25.52B	30.18B	38.40B	25.10B	31.79B	8.14B
Total Debt	30.39B	34.47B	24.02B	3.41B	1.68B	2.81B
Total Liabilities	71.19B	55.12B	43.90B	13.61B	7.22B	7.69B
Stockholders Equity	47.25B	41.25B	39.48B	36.48B	33.48B	7.96B
Cash Flow
Free Cash Flow	12.44B	7.65B	11.10B	-3.06B	3.29B	5.01B
Operating Cash Flow	12.62B	7.84B	12.20B	-811.00M	3.53B	5.04B
Investing Cash Flow	-3.09B	-14.08B	-13.74B	-7.68B	-832.00M	-269.82M
Financing Cash Flow	-14.83B	1.32B	17.83B	1.41B	-193.00M	-549.03M

CHANGE Holdings,Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9889	77 Outperform	¥91.52B	19.07	―	2.32%	5.09%	26.12%
5574	74 Outperform	¥29.02B	35.99	―	―	29.61%	93.16%
3655	70 Outperform	¥58.99B	-40.78	―	0.28%	8.64%	-23.20%
3962	69 Neutral	¥69.42B	3.24	―	1.47%	―	―
9640	68 Neutral	¥38.83B	-348.86	―	3.99%	1.27%	26.79%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4819	55 Neutral	¥93.44B	15.20	2.57%	1.97%	19.61%	―

CHANGE Holdings,Inc. Corporate Events

CHANGE Holdings Posts Higher Sales but Lower Profits, Keeps Full-Year Outlook Intact

CHANGE Holdings, Inc., a Tokyo Prime-listed digital transformation specialist, reported consolidated sales of ¥41.5 billion for the nine months ended December 31, 2025, up 18.9% year on year, but saw operating profit decline 18.8% to ¥10.6 billion as profit before tax and net profit also fell, compressing basic earnings per share to ¥98.92. Total assets rose to ¥126.4 billion and equity attributable to owners increased to ¥47.3 billion despite a lower equity ratio, while the company maintained its full-year forecast for fiscal 2026, including sales of ¥55.0 billion, modest profit growth, a planned year-end dividend of ¥23 per share, and ongoing portfolio reshaping through the consolidation of five new subsidiaries and the exclusion of one entity.

Management highlighted that the scope of consolidation expanded with the addition of Grivity, Thirdly, G-Gravity, PERF and Onwords, while Orb was removed, indicating continued emphasis on M&A to support medium-term growth. Although margins softened during the nine-month period, the reaffirmed earnings and dividend forecasts suggest confidence in stabilizing profitability and generating shareholder returns as the enlarged group is integrated and positioned for gradual earnings recovery.