Blue innovation Co.,Ltd. (5597) AI Stock Analysis

• Market Cap: ¥6.18B
• Dividend Yield: N/A
• Average Volume (3M): 104.66K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.14
• Revenue Growth: -0.02%
• EPS Growth: -12.19%
• Country: JP
• Employees: 69
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): -52.09
• Shares Outstanding: 4,032,201
• 10 Day Avg. Volume: 89,290
• 30 Day Avg. Volume: 104,660
• PEG Ratio: -0.12
• Price to Book (P/B): 22.62
• Price to Sales (P/S): 4.42
• P/FCF Ratio: -13.06
• 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): -72.4
• Revenue Forecast (FY): ¥1.75B

• Rating: 43 Neutral
• Price Target: ¥1,467.00 ▼(-26.13% Downside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is primarily constrained by weak financial performance—contracting revenue, widening losses, persistent cash burn, and increased leverage in 2025. Technical indicators are mixed but lean bearish given the price remains below key longer-term moving averages. Valuation is also a headwind because the company is loss-making (negative P/E) and no dividend yield is available.

Positive Factors

Gross margin resilience

Sustained gross margins in the low-to-mid 40% range indicate the core service offering retains pricing power and cost efficiency at the production layer. If overheads are controlled, this margin buffer supports a credible path to operating leverage and eventual profitability over several quarters.

Asset base stability

A broadly stable asset base provides continuity for operations and limits the need for rapid asset write-downs. Stable assets can be used to support working capital or collateralize financing, helping the firm manage liquidity cycles and enabling restructuring or growth initiatives over the medium term.

Improving free cash flow trend

Year-over-year improvement in free cash flow, even if still negative, signals operational adjustments or cost discipline starting to take effect. Continued improvement reduces external funding needs and, if sustained, would materially lower refinancing risk and support runway extension over several quarters.

Negative Factors

Contracting revenue

Two consecutive years of revenue decline, including a ~14% drop in 2025, point to weakening market traction or client churn. Persistent top-line contraction undermines operating leverage, makes fixed costs harder to cover, and lengthens the time horizon to reach sustainable profitability absent a clear revenue turnaround strategy.

Persistent cash burn

Multi-year negative operating and free cash flow indicates the core business does not self-fund. Ongoing cash burn forces reliance on external debt or equity, increasing dilution or interest burden and exposing the company to refinancing risk, especially if capital markets tighten or investor appetite wanes.

Deteriorated balance sheet / higher leverage

A sharp rise in debt alongside collapsing equity materially increases leverage and reduces the cushion for losses. Higher debt amplifies refinancing and interest-rate risk, limits financial flexibility for strategic investments, and heightens bankruptcy risk if operating performance does not improve within the near-to-medium term.

Blue innovation Co.,Ltd. Business Overview & Revenue Model

Company Description

Blue Innovation Co., Ltd. (5597) is a dynamic technology firm specializing in the development and provision of advanced solutions in the fields of artificial intelligence, IoT (Internet of Things), and smart manufacturing. The company operates in various sectors including healthcare, automotive, and smart cities, offering a range of products such as AI-driven analytics platforms, IoT devices, and automation software. With a commitment to innovation and sustainability, Blue Innovation aims to enhance operational efficiency and drive digital transformation for its clients.

How the Company Makes Money

Blue Innovation Co., Ltd. generates revenue primarily through the sale of its technology products and services, including software licenses, hardware sales, and subscription-based models for its cloud services. Key revenue streams include direct sales to businesses in targeted industries, consulting and implementation services for custom solutions, and ongoing maintenance and support contracts. The company also benefits from strategic partnerships with other tech firms and industry leaders, which help to expand its market reach and enhance its product offerings. Additionally, Blue Innovation may engage in joint ventures or collaborations that provide further opportunities for monetization.

Blue innovation Co.,Ltd. Financial Statement Overview

Summary

Income statement and cash flow are weak: revenue is contracting and losses widened, with negative EBIT/EBITDA and multi-year negative operating/free cash flow. Balance sheet risk also rose in 2025 as debt increased while equity fell, reducing financial flexibility despite historically solid gross margins.

Income Statement

Revenue has been volatile and is now contracting (2025 revenue down ~14% after a small decline in 2024). Profitability remains weak: the company is deeply loss-making at the operating level (negative EBIT/EBITDA each year), and net losses widened materially in 2025 versus 2024. A key positive is that gross profit has held up historically with solid gross margin levels (low-to-mid 40% range in prior years), but the cost structure below gross profit is still overwhelming, preventing progress toward break-even.

Balance Sheet

Balance sheet risk increased meaningfully in 2025: total debt rose to ~¥957m while equity fell to ~¥205m, implying much higher leverage than prior years and reduced cushion against ongoing losses. Earlier periods showed more moderate leverage (debt-to-equity below 1.0 in 2023–2024), but the recent deterioration (lower equity and higher debt) raises refinancing and financial flexibility concerns despite total assets remaining broadly stable.

Cash Flow

Cash generation is a major weakness: operating cash flow and free cash flow are negative every year shown, indicating the core business has not funded itself. While 2025 free cash flow improved versus 2024 (less negative), it remains materially below zero, and the multi-year pattern suggests continued cash burn and likely ongoing dependence on external funding (debt or equity) to sustain operations.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.05B	1.22B	1.26B	908.40M	725.68M
Gross Profit	410.49M	510.63M	566.45M	390.82M	238.48M
EBITDA	-501.46M	-340.11M	-249.37M	-297.74M	-355.88M
Net Income	-635.46M	-394.72M	-299.27M	-345.12M	-395.00M
Balance Sheet
Total Assets	1.40B	1.34B	1.79B	937.12M	1.04B
Cash, Cash Equivalents and Short-Term Investments	988.22M	668.50M	1.22B	527.30M	675.10M
Total Debt	956.50M	474.08M	491.66M	400.00M	400.00M
Total Liabilities	1.20B	709.47M	757.01M	571.15M	559.32M
Stockholders Equity	205.26M	633.35M	1.03B	365.97M	480.57M
Cash Flow
Free Cash Flow	-355.61M	-531.70M	-350.88M	-377.79M	-334.58M
Operating Cash Flow	-327.71M	-494.23M	-320.20M	-365.24M	-282.44M
Investing Cash Flow	-27.90M	-37.47M	-30.67M	-12.55M	-52.15M
Financing Cash Flow	675.32M	-21.86M	1.05B	230.00M	400.00M

Blue innovation Co.,Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1986.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:5597, the sentiment is Negative. The current price of 1986 is above the 20-day moving average (MA) of 1555.10, above the 50-day MA of 1503.88, and above the 200-day MA of 1806.55, indicating a bearish trend. The MACD of -50.83 indicates Positive momentum. The RSI at 41.43 is Neutral, neither overbought nor oversold. The STOCH value of 6.11 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:5597.

Blue innovation Co.,Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4335	81 Outperform	¥2.94B	9.82	―	3.28%	9.68%	25.15%
4421	79 Outperform	¥2.85B	12.01	―	2.86%	5.74%	5.97%
5868	73 Outperform	¥4.38B	13.78	―	0.94%	14.35%	105.59%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4261	57 Neutral	¥5.78B	19.80	―	―	27.60%	-15.54%
5597	43 Neutral	¥6.18B	-9.55	―	―	-0.02%	-12.19%
5255	39 Underperform	¥8.60B	-2.50	―	―	-29.41%	79.74%