HENNGE K.K. (4475) AI Stock Analysis

• Market Cap: ¥32.66B
• Dividend Yield: 0.39%
• Average Volume (3M): 546.35K
• Price to Earnings (P/E): 24.3
• Beta (1Y): 0.32
• Revenue Growth: 30.59%
• EPS Growth: 65.14%
• Country: JP
• Employees: 311
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 11.56
• Shares Outstanding: 32,500,600
• 10 Day Avg. Volume: 584,820
• 30 Day Avg. Volume: 546,350
• PEG Ratio: 0.58
• Price to Book (P/B): 13.26
• Price to Sales (P/S): 4.72
• P/FCF Ratio: 19.12
• 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: 68 Neutral
• Price Target: ¥1,110.00 ▼(-15.01% Downside)
• Action: Reiterated Date: 02/06/26
• Date: Action: Reiterated 02/06/26

Score is anchored by strong financial performance (high margins, improving profitability, low leverage, and solid cash generation), but is materially offset by very weak current technicals (below major moving averages with bearish momentum). Valuation is moderate for a software name, with a low dividend yield providing limited support.

Positive Factors

High gross margins & rising profitability

Sustained gross margins in the low‑80s and improving operating/net margins indicate durable unit economics typical of scalable SaaS. This supports margin resilience as revenue grows, funds reinvestment in product and sales, and strengthens long‑term cash generation capacity.

Strong free cash flow conversion

High FCF-to-net-income shows earnings are backed by cash, reducing reliance on external financing. Reliable cash conversion enables sustained R&D and customer success investment, supports optionality for buybacks or M&A, and underpins financial stability across business cycles.

Conservative balance sheet and improving ROE

Very low leverage and a rising ROE reflect efficient capital use and a conservative financial posture. This provides flexibility to fund growth, weather downturns, or pursue strategic investments with limited interest burden, enhancing long‑term corporate resilience.

Negative Factors

Uneven revenue growth cadence

Periodic softness in revenue growth reduces predictability of top‑line expansion and complicates capacity planning. For a subscription SaaS model, uneven growth can signal cyclical demand, account concentration, or sales execution gaps that may slow sustainable scale and ROI on go‑to‑market investments.

Moderate operating cash flow relative to revenue

OCF-to-revenue in the low‑single digits range implies material working capital or reinvestment needs as the business scales. Even with strong FCF conversion to net income, moderate OCF margins can limit free cash available for rapid expansion, dividends, or aggressive M&A over medium term.

Introduction of debt in 2025

Taking on debt after a net‑debt‑free history alters the company’s capital structure and introduces interest and refinancing risk. If growth weakens, even modest leverage can pressure flexibility and credit metrics, raising the importance of cash generation to service obligations.

HENNGE K.K. Business Overview & Revenue Model

Company Description

HENNGE K.K. provides cloud security services worldwide. The company offers HENNGE One, a cloud-based identity and access management solution that offers single sign-on. It also provides HENNGE Secure Browser, which enables users to securely access cloud services federated with HENNGE One using HENNGE One account; and HENNGE OTP Generator, a virtual device application for multi-factor authentication that generates time-based one-time passwords complying with RFC 6238. The company was formerly known as HDE, Inc. and changed its name to HENNGE K.K. in February 2019. HENNGE K.K. was founded in 1996 and is headquartered in Tokyo, Japan.

How the Company Makes Money

HENNGE K.K. generates revenue through a subscription-based model for its cloud security services. The company's primary revenue stream comes from the sale of subscriptions to HENNGE One, which provides secure access management, email security, and cloud data protection. Customers pay a recurring fee, typically on a monthly or annual basis, for access to the platform and its suite of security features. Additionally, HENNGE collaborates with various cloud service providers and technology partners to enhance its offerings, which can also contribute to its revenue through joint marketing efforts or bundled service packages.

HENNGE K.K. Financial Statement Overview

Summary

Strong fundamentals supported by very high gross margins (~82%–86%), improving operating and net margins (EBIT margin up to ~17% and net margin to ~12.4% in 2025), and rising operating/free cash flow with FCF closely tracking net income (~0.85–0.99). Balance sheet remains conservatively levered (debt-to-equity ~0.04) with improving ROE (to ~35% in 2025). Main risk is uneven growth cadence (notably softer growth in 2024) and modest cash conversion versus revenue.

Income Statement

Revenue has expanded strongly over the period (from 2020 to 2025 annual), with steady growth through 2023 and an acceleration in the latest year. Profitability is a clear strength: gross margin remains very high (~82% to ~86%) and operating profitability has improved meaningfully (EBIT margin rising from ~8% in 2021 to ~17% in 2025). Net margin also improved (about ~4.6% in 2021 to ~12.4% in 2025), indicating better scale economics. The main offset is that growth was notably softer in 2024 versus prior years, suggesting some periodic demand variability.

Balance Sheet

The balance sheet is conservatively positioned with minimal leverage: debt was effectively zero for multiple years and remains very low in 2025 (debt-to-equity ~0.04). Equity has grown consistently, supporting a larger asset base. Returns on equity are strong and improving (roughly ~12% in 2021 to ~35% in 2025), indicating efficient capital use. A watch item is the introduction of debt in 2025 (even if small), which is a change from prior years’ net-debt-free profile.

Cash Flow

Cash generation is a key positive: operating cash flow and free cash flow have risen materially over time, and free cash flow tracks net income closely (free cash flow to net income ~0.85–0.99 across the period), suggesting earnings are backed by cash. The latest year shows a very large jump in free cash flow growth, reinforcing strong operating momentum. The primary drawback is that operating cash flow relative to revenue remains moderate (~0.21 to ~0.42), implying the business still retains meaningful cash needs as it scales.

Breakdown	Sep 2025	Sep 2024	Sep 2023	Sep 2022	Sep 2021
Income Statement
Total Revenue	10.92B	8.36B	6.78B	5.65B	4.84B
Gross Profit	9.45B	7.04B	5.68B	4.77B	4.02B
EBITDA	1.93B	1.05B	743.62M	501.42M	416.00M
Net Income	1.36B	827.41M	508.83M	321.17M	223.84M
Balance Sheet
Total Assets	10.74B	8.29B	6.29B	5.21B	4.49B
Cash, Cash Equivalents and Short-Term Investments	7.32B	6.33B	4.59B	4.05B	3.39B
Total Debt	148.15M	0.00	0.00	0.00	0.00
Total Liabilities	6.90B	5.30B	3.88B	3.11B	2.65B
Stockholders Equity	3.89B	2.99B	2.42B	2.09B	1.84B
Cash Flow
Free Cash Flow	2.70B	1.87B	1.14B	748.20M	505.20M
Operating Cash Flow	2.73B	1.93B	1.23B	776.74M	526.93M
Investing Cash Flow	-1.34B	-34.83M	-425.16M	-119.78M	-25.36M
Financing Cash Flow	-417.51M	-150.98M	-270.31M	-100.00K	17.83M

HENNGE K.K. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1306.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4475, the sentiment is Negative. The current price of 1306 is above the 20-day moving average (MA) of 1010.00, above the 50-day MA of 1168.24, and below the 200-day MA of 1472.57, indicating a bearish trend. The MACD of -62.64 indicates Negative momentum. The RSI at 43.20 is Neutral, neither overbought nor oversold. The STOCH value of 65.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4475.

HENNGE K.K. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3040	73 Outperform	¥36.91B	16.09	19.71%	3.09%	3.44%	79.35%
4704	71 Outperform	¥682.74B	19.82	29.20%	2.57%	1.91%	44.78%
3915	68 Neutral	¥23.06B	15.13	―	―	17.93%	91.21%
4475	68 Neutral	¥32.66B	24.33	―	0.39%	30.59%	65.14%
4493	67 Neutral	¥16.78B	20.22	―	0.17%	31.39%	13.12%
4417	65 Neutral	¥40.97B	31.12	―	0.90%	25.06%	37.24%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

HENNGE K.K. Corporate Events

HENNGE Posts Strong Revenue Growth but Lower Profit, Keeps FY2026 Outlook and Hikes Dividend

HENNGE K.K. reported consolidated results for the three months ended 31 December 2025 showing solid top-line growth but softer profitability. Net sales rose 20.1% year on year to ¥3,016 million, while operating profit was essentially flat at ¥530 million and ordinary profit fell 11.9% to ¥527 million; profit attributable to owners of parent declined 9.9% to ¥366 million, with basic earnings per share easing to ¥11.56. The company’s total assets stood at ¥9,156 million and equity ratio at 33.9%, down from the previous fiscal year-end, reflecting a decrease in net assets and an increase in treasury shares to 1,350,532. For the fiscal year ending 30 September 2026, HENNGE maintained its previous forecast, targeting net sales of ¥12,834 million (up 17.5%), operating profit of ¥2,057 million (up 14.7%), and profit attributable to owners of parent of ¥1,595 million (up 17.4%), and it plans to raise the annual dividend to ¥6 per share from ¥5 in the prior year, signaling confidence in its medium-term earnings trajectory despite near-term margin pressure.

The most recent analyst rating on (JP:4475) stock is a Buy with a Yen1325.00 price target. To see the full list of analyst forecasts on HENNGE K.K. stock, see the JP:4475 Stock Forecast page.

HENNGE Completes Disposal of Treasury Shares for Restricted Stock Remuneration

HENNGE K.K. has completed the payment procedures for the disposal of 17,700 treasury shares as restricted stock remuneration, following a Board of Directors resolution made on December 24, 2025. The shares, all common stock, were disposed of on January 26, 2026, at a price of JPY 1,266 per share for a total value of JPY 22,408,200, and were allotted to nine company directors, including audit and supervisory committee members and two outside directors, underscoring the company’s continued use of equity-based compensation to align management incentives with shareholder interests.

The most recent analyst rating on (JP:4475) stock is a Buy with a Yen1513.00 price target. To see the full list of analyst forecasts on HENNGE K.K. stock, see the JP:4475 Stock Forecast page.

HENNGE to Grant ¥22 Million in Restricted Stock to Directors as Part of Long-Term Incentive Plan

HENNGE K.K. has approved the disposal of 17,700 treasury shares as restricted stock remuneration for nine directors, including outside directors and Audit and Supervisory Committee members, with a total value of ¥22.4 million at a disposal price aligned with the latest market close on the Tokyo Stock Exchange. The move is part of a previously approved long-term equity compensation plan designed to more closely link director pay with shareholder value and share price performance, using multi-year transfer restrictions to promote retention and sustained contribution to corporate value, while signaling continued use of stock-based incentives in the company’s governance and compensation framework.

HENNGE Completes Treasury Share Buyback Totaling 700,000 Shares

HENNGE K.K. has completed a share buyback program authorized by its board on November 21, 2025, acquiring 580,000 shares of its common stock for approximately ¥751 million between December 1 and December 19, 2025. Cumulatively under the broader authorization, the company has repurchased 700,000 shares for about ¥910 million, using market purchases on the Tokyo Stock Exchange, a move that is likely aimed at enhancing shareholder value, optimizing capital structure, and signaling management’s confidence in the company’s prospects to investors.

HENNGE K.K. Announces Treasury Share Acquisition to Enhance Corporate Value

HENNGE K.K. has announced its decision to acquire up to 700,000 treasury shares, representing a maximum of 2.2% of its total outstanding shares, as part of its strategy to enhance corporate value by balancing profit growth and capital efficiency. This move is aimed at preventing share dilution and supporting strategic initiatives such as stock compensation plans and potential mergers or alliances, leveraging the company’s strong financial position with no current debt.

HENNGE K.K. Announces Change in Major Shareholder

HENNGE K.K. announced a change in its major shareholders as Yoshiki Nagatome, a key shareholder and Executive Senior Vice President, sold a portion of his shares to TORECO, Inc., an asset management firm. This transaction slightly reduces Nagatome’s voting rights but does not affect the company’s management structure or performance.

HENNGE K.K. Increases Dividend Amid Strong Financial Performance

HENNGE K.K. announced an increase in its dividend distribution from retained earnings, with a new dividend of JPY 5.00 per share, up from the previously forecasted JPY 4.00. This decision reflects the company’s commitment to maximizing shareholder value and its confidence in maintaining stable financial performance, indicating a positive outlook for stakeholders.

HENNGE K.K. Reports Robust Financial Growth for FY 2025

HENNGE K.K. reported significant financial growth for the fiscal year ended September 30, 2025, with net sales increasing by 30.6% and operating profit rising by 76.7% compared to the previous year. The company’s strong financial performance highlights its robust market positioning and potential positive implications for stakeholders, indicating a successful trajectory in its operations.

HENNGE K.K. Prepares for Tokyo Stock Exchange Prime Market Application

HENNGE K.K. has announced its Board of Directors’ decision to prepare for an application to move from the Tokyo Stock Exchange Growth Market to the Prime Market. This strategic move is intended to support the company’s long-term growth, strengthen its brand, and improve its governance structure. However, the application process is still in the early stages, with no set dates for application or approval, and there are uncertainties regarding meeting the necessary requirements.