The peer comparison table in the report available to my clients indicates that these software and application stocks are performing well under the digital transformation (DX) theme. I’m focusing on Cybozu, as it has strong potential to continue delivering robust OP growth. I recently spoke with the company to discuss their strategy for boosting OP. This report centers on insights from that interview.

We need to assess whether the company’s elevated P/E ratio of 32x is justified by its strong operating profit growth outlook—although next year’s projected 72% increase may not recur—supported by a robust 50% ROE and a debt-free balance sheet.

Please consider becoming my trial client read the report  to the Super Simple Scenario Analysis at the end—I’d greatly appreciate your thoughts on my perspective.

Company description:

Cybozu develops groupware software with 4 product lines (shown below) which are business software for information sharing, including calendar and email management tools. The company has shifted focus to the cloud, progressively converting its groupware into cloud-based solutions. Their kintone platform, which enables users to easily create business efficiency applications without programming, has been expanding. Initially targeting small and mid-sized businesses, they have strengthened their services for larger enterprises as well. Internationally, after withdrawing from the U.S. once, they re-entered the market in 2014 and have also expanded into Greater China and Southeast Asia.

Kintone grows as sales through agencies/partners expand, leading to an increasing customer base. Groupware remains solid, contributing to accumulating revenue. The price increase of 20% implemented in the latter half of the previous fiscal year is now fully reflected. Dividends are increasing consecutively.