Serendip is a small-cap name, yet its FY3/26 P/E of 9.6x stands in stark contrast to peers like Genda (30x) and Next Gen (68x). This discount suggests the market may be skeptical of Serendip’s ambitious 145% operating profit guidance for FY3/26. The valuation disconnect is puzzling, especially given its EV/EBIT of 29x—nearly on par with Genda’s 26x. I’d welcome your thoughts on this anomaly. More on Serendip’s valuation to follow.
Serendip’s business model involves acquiring shares of companies facing succession challenges – mainly the absence of a successor—and integrating them into its corporate group. It then dispatches management personnel and provides operational support to facilitate smooth business succession while aiming to enhance long-term corporate value.
There are many acquisition growth models in Japan. Serendip, with a market cap of Y24 Bn, is one of the smaller ones with a lower valuation. It is too small for many of you, but it may get bigger sooner than we may realize.
World Economic Forum estimates that by the end of 2025, approximately half (1.27 million) of SME and small business owners over the age of 70 will have no successor to manage their operations, a 3rd of all Japanese companies. Many of these companies are in manufacturing industries, providing a great growth runway for Serendip.
My note to the clients includes 1) a brief company business model discussion and 2) its potential to improve its low operating margin, which should lead to higher multiples.
If you’re interested in learning more about Serendip and its growth potential, I’d like to invite you to experience my service—completely free of charge. I am confident that once you discover the value, convenience, and quality I offer, you’ll be glad you gave me a try.
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