SCSK Corporation (9719) AI Stock Analysis

• Market Cap: ¥1.77T
• Dividend Yield: 1.48%
• Average Volume (3M): 893.82K
• Price to Earnings (P/E): 28.9
• Beta (1Y): 0.78
• Revenue Growth: 42.98%
• EPS Growth: 48.88%
• Country: JP
• Employees: 16,296
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 70.98
• Shares Outstanding: 313,125,270
• 10 Day Avg. Volume: 769,110
• 30 Day Avg. Volume: 893,820
• PEG Ratio: 2.27
• Price to Book (P/B): 3.96
• Price to Sales (P/S): 1.93
• P/FCF Ratio: 19.88
• 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: ¥4,800.00
• Price Target Upside: -15.33% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 69 Neutral
• Price Target: ¥6,236.00 ▲(10.00% Upside)

SCSK Corporation's stock score is primarily driven by strong financial performance, with robust revenue growth and profitability. However, technical indicators suggest the stock is currently overbought, and valuation metrics indicate potential overvaluation. Investors should monitor leverage and cash flow trends closely.

Positive Factors

Revenue Growth

SCSK's robust revenue growth indicates strong demand for its IT services, supporting its market position and potential for future expansion.

Profitability

Healthy profit margins suggest effective cost management and pricing power, contributing to sustainable long-term profitability.

Cash Generation

Strong cash generation relative to earnings enhances financial flexibility, allowing for reinvestment and debt servicing.

Negative Factors

Debt Levels

High reliance on debt could pose risks in volatile markets, potentially impacting financial stability and increasing interest obligations.

Free Cash Flow Decline

Declining free cash flow growth may limit the company's ability to invest in growth opportunities and maintain liquidity.

Debt-to-Equity Ratio

While leverage is strategic, a high debt-to-equity ratio can increase financial risk, especially if earnings fluctuate.

SCSK Corporation Business Overview & Revenue Model

Company Description

SCSK Corporation provides information technology (IT) services in Japan and internationally. The company's Manufacturing & Telecommunication Systems Business segment offers IT solutions comprising core systems, manufacturing and information management systems, supply chain management (SCM), and customer relationship management (CRM) systems for manufacturing, communication, and energy industries. Its Distribution & Media Systems Business segment offers IT solutions, such as core and information systems, SCM, CRM, and e-commerce systems for distribution, service, and media industries. The company's Global System Solutions & Innovation Business segment provides IT solutions for trading companies. Its Financial IT Business segment develops, maintains, and operates systems for banks and trust banks, as well as insurance, securities, lease, and credit companies. The company's IT Business Solutions segment provides contact center services; and application management outsourcing services that covers development, installation, maintenance, and operation of enterprise resource planning and CRM products, such as ProActive, SAP, Oracle, and Salesforce, as well as business process outsourcing services. Its IT Platform Solutions segment provides services and products in the fields of IT infrastructure and manufacturing, including computer-aided design and engineering. The company's IT Management Service segment develops solutions-oriented netXDC data centers to provide outsourcing services; and provides cloud infrastructure, on-site SE support management services. Its Mobility System segment offers software development and assessments, middleware, and process improvement measures for automobile electronic control units. The company was formerly known as Sumisho Computer Systems Corporation and changed its name to SCSK Corporation in October 2011. The company was incorporated in 1969 and is headquartered in Tokyo, Japan. SCSK Corporation is a subsidiary of Sumitomo Corporation.

How the Company Makes Money

SCSK generates revenue primarily through its IT services and solutions, which encompass system integration, software development, and IT consulting. The company's revenue model is driven by project-based contracts, ongoing maintenance agreements, and subscription services for cloud solutions. Key revenue streams include fees for custom software development, licensing of proprietary software products, and managed services. Additionally, SCSK has established significant partnerships with leading technology firms, enabling it to offer integrated solutions that further enhance its market competitiveness and contribute to its earnings.

SCSK Corporation Financial Statement Overview

Summary

SCSK Corporation exhibits strong financial health with robust revenue growth and efficient operations. The company maintains a solid equity base, but increasing debt levels warrant monitoring. The cash flow position is strong, supporting future growth and stability. Continued focus on improving net profit margins and managing leverage will be key to sustaining long-term financial performance.

Income Statement

SCSK Corporation demonstrates strong revenue growth with a TTM increase of 9.22%, indicating robust demand for its services. The gross profit margin remains stable at approximately 26.75%, reflecting efficient cost management. However, the net profit margin of 7.56% suggests room for improvement in profitability. The EBIT and EBITDA margins are healthy at 11.19% and 15.36%, respectively, showcasing operational efficiency.

Balance Sheet

The company's debt-to-equity ratio of 1.08 indicates a balanced approach to leveraging, though it has increased compared to previous years, suggesting a potential risk if not managed carefully. The return on equity (ROE) is strong at 14.77%, highlighting effective use of shareholder funds. The equity ratio of 33.62% suggests a solid equity base, though there is a reliance on debt financing.

Cash Flow

SCSK Corporation shows a significant free cash flow growth rate of 30.11% TTM, indicating improved cash generation capabilities. The operating cash flow to net income ratio is 1.73, suggesting strong cash conversion from earnings. The free cash flow to net income ratio of 0.85 reflects a healthy cash flow position, supporting future investments and debt servicing.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	715.82B	596.07B	480.31B	445.91B	414.15B	396.85B
Gross Profit	194.75B	159.48B	121.91B	117.68B	108.19B	102.97B
EBITDA	122.60B	91.74B	80.45B	73.57B	67.47B	65.47B
Net Income	61.41B	45.04B	40.46B	37.30B	33.47B	33.44B
Balance Sheet
Total Assets	879.17B	885.03B	471.40B	435.47B	407.61B	380.40B
Cash, Cash Equivalents and Short-Term Investments	140.36B	105.62B	149.37B	121.62B	122.33B	108.99B
Total Debt	375.77B	315.41B	73.97B	77.92B	78.97B	85.64B
Total Liabilities	562.09B	592.46B	168.49B	163.07B	160.25B	153.06B
Stockholders Equity	315.67B	291.42B	302.25B	271.91B	246.92B	226.87B
Cash Flow
Free Cash Flow	73.57B	58.00B	58.31B	29.28B	45.00B	32.95B
Operating Cash Flow	85.58B	68.04B	67.90B	43.59B	59.08B	50.22B
Investing Cash Flow	-260.64B	-275.49B	-19.90B	-14.95B	-14.93B	-20.59B
Financing Cash Flow	160.51B	167.95B	-25.88B	-29.07B	-32.34B	-32.49B

SCSK Corporation Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5669.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:9719, the sentiment is Positive. The current price of 5669 is below the 20-day moving average (MA) of 5681.80, above the 50-day MA of 5194.40, and above the 200-day MA of 4434.47, indicating a neutral trend. The MACD of 98.25 indicates Positive momentum. The RSI at 68.57 is Neutral, neither overbought nor oversold. The STOCH value of 14.58 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:9719.

SCSK Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2317	76 Outperform	¥188.44B	18.12	―	2.31%	13.82%	37.07%
2327	74 Outperform	¥798.22B	29.70	10.07%	1.78%	11.66%	-0.21%
3626	73 Outperform	¥1.24T	23.35	―	1.39%	4.95%	9.54%
9719	69 Neutral	¥1.77T	28.86	―	1.48%	42.98%	48.88%
9682	66 Neutral	¥193.44B	17.04	18.89%	2.81%	11.90%	60.66%
8056	66 Neutral	¥496.28B	17.42	―	2.21%	10.42%	28.75%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

SCSK Corporation Corporate Events

SCSK Corporation Supports Tender Offer by Sumitomo Subsidiary

SCSK Corporation’s Board of Directors has expressed support for a tender offer by SC Investments Management Inc., a subsidiary of Sumitomo Corporation, to acquire all of SCSK’s shares. This move is part of Sumitomo’s plan to make SCSK a wholly-owned subsidiary, with the intention of delisting its shares, which could significantly impact the company’s market presence and shareholder dynamics.

SCSK Corporation Revises Dividend Forecast Amid Tender Offer Plans

SCSK Corporation has announced a revision to its year-end dividend forecast, deciding not to distribute dividends for the fiscal year ending March 31, 2026. This decision is linked to a tender offer by SC Investments Management Inc., a subsidiary of Sumitomo Corporation, which aims to make SCSK a wholly owned subsidiary and subsequently delist its shares. The move reflects a strategic shift in the company’s financial planning, prioritizing the tender offer’s terms over immediate shareholder returns.