baudroie Inc.  (4413): Sales Y/Y +40% and OP Y/Y +60% vs. P/E 53x

This high-growth IT infrastructure company can be a difficult stock to evaluate, with a myriad of positives offset by several negatives.

Positives:

• The industry-leading sales (FY2/17-24 CAGR of 24%) and profit growth (OP growth CAGR of 40%).
• Pioneered a new graduates training system to efficiently compete in the IT Infrastructure space
• Specialized in advanced technology area (i.e. higher growth) of System Integrations
• Potential Move to TSE Prime

Negatives:

• High management ownership of 71.6%/low liquidity (but can imply quick decision-making).

Mitigant: Also, management’s public comment re: TSE Prime move (timing unknown) suggests that management fully intends to raise the liquidity of its shares by about 10% to meet the Prime Market standard of 35%.

• High valuation (53X for FY2/25, 42x for FY2/26)
• Competitors replicate the company’s business models, especially the new graduate’s training system.

Mitigant: The company has a 10-year lead in its recruiting and training system.

In a research report, I have discussed why I think this company is worth taking a deeper look at, despite these challenges, mainly, high valuation.  If interested, please DM me. Thanks!