AsiaQuest Co.,Ltd. (4261) AI Stock Analysis

• Market Cap: ¥5.45B
• Dividend Yield: N/A
• Average Volume (3M): 6.50K
• Price to Earnings (P/E): 19.1
• Beta (1Y): 0.97
• Revenue Growth: 27.60%
• EPS Growth: -15.54%
• Country: JP
• Employees: 480
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 58.02
• Shares Outstanding: 1,477,600
• 10 Day Avg. Volume: 5,980
• 30 Day Avg. Volume: 6,500
• PEG Ratio: -13.11
• Price to Book (P/B): 3.19
• Price to Sales (P/S): 1.27
• P/FCF Ratio: -141.34
• 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: 57 Neutral
• Price Target: ¥3,633.00 ▼(-14.62% Downside)
• Action: Downgraded Date: 02/18/26
• Date: Action: Downgraded 02/18/26

The score is primarily supported by solid fundamentals (strong revenue growth and a much stronger, low-leverage balance sheet). This is offset by a major 2025 cash-flow reversal and margin compression, and technicals that remain bearish with the stock trading below key moving averages despite oversold readings.

Positive Factors

Multi-year revenue growth

Sustained top-line expansion over several years indicates strong underlying demand and successful scaling of the business model. Persistent revenue growth improves operating leverage potential, supports reinvestment in products and sales, and underpins long-term market position if margins stabilize.

Conservative, low-leverage balance sheet

Materially lower leverage and a strengthened equity base provide financial flexibility and resilience. Low debt limits insolvency risk, preserves capacity to fund strategic investments or cover cash-flow variability, and reduces interest burden as the company pursues longer-term growth.

Stable gross margin profile

A consistent gross margin near 48% signals durable unit economics and pricing or cost structure stability at the product/service level. This margin base gives management room to restore operating profitability if SG&A or operating costs are controlled, supporting longer-term margin recovery prospects.

Negative Factors

Sharp cash-flow deterioration

A large reversal in operating cash flow and negative free cash flow signal near-term cash-conversion stress. Persistent working-capital drag or higher investments could constrain reinvestment, raise liquidity needs, and force reliance on external financing, increasing execution and funding risk over coming quarters.

Operating margin compression

Material decline in operating margins reduces the firm's ability to convert revenue into sustainable profits and cash. Margin erosion may reflect rising costs or weaker pricing power, which undermines return on capital and limits capacity to fund growth without restoring cost efficiency.

Pressure on sustaining returns as scale grows

Although 2024 ROE was strong, combined margin compression and cash-flow volatility create risk that returns will weaken as the company scales. If profitability and cash conversion are not re-established, equity growth and long-term shareholder returns may be impaired despite a strong balance sheet.

AsiaQuest Co.,Ltd. Business Overview & Revenue Model

Company Description

AsiaQuest Co., Ltd. provides digital transformation services in Japan and internationally. The company offers DX solutions and consulting; Internet of Things and artificial intelligence systems; and cloud deployment support, including amazon web service, Microsoft azure, google cloud, and SaaS/security implementation support services. It also provides web system development, app development, and UI/UX services. AsiaQuest Co., Ltd. was incorporated in 2012 and is headquartered in Tokyo, Japan.

How the Company Makes Money

AsiaQuest generates revenue through multiple streams, including the sale of software licenses, subscription fees for cloud services, and customized IT solutions for businesses. A significant portion of its income comes from long-term contracts with corporate clients in telecommunications and finance, where the company provides ongoing support and system maintenance. Additionally, AsiaQuest has established partnerships with leading technology firms, enabling it to offer integrated solutions that enhance its service portfolio. These collaborations not only expand its market reach but also contribute to its earnings by attracting new clients looking for comprehensive IT solutions.

AsiaQuest Co.,Ltd. Financial Statement Overview

Summary

Strong multi-year revenue growth and a materially improved, low-leverage balance sheet are key positives. However, profitability has been compressing and 2025 cash generation deteriorated sharply (operating cash flow fell materially and free cash flow turned negative), raising near-term execution and cash-conversion risk.

Income Statement

Revenue has grown strongly over the last several years (from ~¥1.80B in 2020 to ~¥4.92B in 2025), showing solid demand and scale-up. Profitability remains healthy with a stable gross margin around ~48% in 2023–2025, but operating profitability has cooled versus earlier peaks (EBITDA margin down from ~15.5% in 2022 to ~10.7% in 2025; EBIT margin down from ~14.0% to ~8.9%). Net margin also compressed in 2025 (~5.9% vs ~7.3% in 2024), indicating rising costs or weaker pricing power despite top-line growth.

Balance Sheet

The balance sheet looks conservatively financed and has improved materially over time. Leverage is low in 2025 with debt at ~0.08x equity (down from very high leverage in 2020), and equity has grown meaningfully alongside asset growth (assets ~¥2.93B in 2025). This provides flexibility and lowers financial risk; the main watch item is sustaining returns as the company scales (recent profitability pressure could weigh on equity returns, though 2024 ROE was strong at ~17.5%).

Cash Flow

Cash generation weakened sharply in the most recent year: operating cash flow fell to ~¥72M in 2025 versus ~¥521M in 2024, and free cash flow turned negative (~-¥44M). Cash conversion also deteriorated, with operating cash flow covering only a small portion of net income in 2025 and free cash flow below net income, suggesting working-capital drag and/or higher investment needs. While 2024 showed strong positive free cash flow, the volatility and 2025 reversal increase near-term cash-flow risk.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	4.62B	4.92B	4.06B	3.14B	2.61B	2.24B
Gross Profit	2.20B	2.40B	1.95B	1.51B	1.27B	1.02B
EBITDA	533.46M	524.07M	527.62M	353.94M	405.66M	329.28M
Net Income	290.54M	290.95M	295.40M	198.00M	232.45M	195.83M
Balance Sheet
Total Assets	2.78B	2.93B	2.76B	2.26B	2.15B	1.97B
Cash, Cash Equivalents and Short-Term Investments	1.38B	1.46B	1.52B	1.52B	1.56B	1.49B
Total Debt	147.91M	161.76M	178.66M	324.00M	469.39M	599.49M
Total Liabilities	949.87M	959.58M	1.08B	865.00M	958.47M	1.06B
Stockholders Equity	1.83B	1.97B	1.69B	1.40B	1.19B	911.08M
Cash Flow
Free Cash Flow	0.00	-44.37M	308.29M	93.00M	170.09M	277.30M
Operating Cash Flow	0.00	72.41M	521.18M	127.00M	197.70M	301.91M
Investing Cash Flow	0.00	-85.91M	-373.76M	-34.31M	-27.84M	3.93M
Financing Cash Flow	0.00	-44.95M	-149.44M	-142.00M	-101.42M	385.92M

AsiaQuest Co.,Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 4255.00
• 50DMA: Negative
• 100DMA: Negative
• 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:4261, the sentiment is Negative. The current price of 4255 is above the 20-day moving average (MA) of 3867.25, above the 50-day MA of 4153.40, and above the 200-day MA of 3232.51, indicating a neutral trend. The MACD of -142.55 indicates Positive momentum. The RSI at 38.35 is Neutral, neither overbought nor oversold. The STOCH value of 35.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4261.

AsiaQuest Co.,Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3984	80 Outperform	¥24.58B	14.73	―	0.73%	17.86%	21.52%
3655	70 Outperform	¥58.97B	606.48	―	0.28%	8.64%	-23.20%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4053	58 Neutral	¥15.72B	32.55	―	―	9.82%	-32.60%
4261	57 Neutral	¥5.45B	19.09	―	―	27.60%	-15.54%
5026	46 Neutral	¥6.12B	-16.70	―	―	29.55%	-500.01%
5255	39 Underperform	¥7.44B	-2.28	―	―	-29.41%	79.74%