ITFOR: Unveiling a Hidden Gem in Japan's IT Service Sector
Dive into the world of ITFOR, a prominent player in Japan's IT service sector since 1972, with a credit information and collection system widely adopted by regional banks. Learn about their stable track-record, strong fundamentals, and attractive valuation, tailored for qualifying investors seeking promising opportunities in the market.
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Presentation Transcript
ITFOR A HIDDEN GEM FROM THE IT SERVICE SECTOR IN JAPAN Established in 1972 & based in Tokyo #1 credit information & collection system adopted by 70% of regional banks in Japan 42% of revenue are recurring at ~20% operating profit margin 30 13% ROIC management goal 1 Confidential For Qualifying Investors Only Open to Qualified Investors Only ASCENDER CAPITAL ASCENDER CAPITAL 1
ITFOR STABLE TRACK-RECORD SUPPORTED BY STRONG FUNDAMENTALS 20,000 (JPY mm) 6% revenue CAGR 16,000 12,000 9% EBIT CAGR 8,000 16% EBITDA margin 4,000 70% FCF conversion 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 EBIT Gross profit Revenue Growing wallet shares 90%+ client retention 30 Maintenance fee up 30% after 5 years 2 Confidential For Qualifying Investors Only Open to Qualified Investors Only ASCENDER CAPITAL ASCENDER CAPITAL 2
ITFOR ALIGNMENT OF INTEREST WITH MINORITY SHAREHOLDERS Total shareholder returns to double to 70% in FY23 including buybacks Revert to pre-Covid trend after turning cautious during Covid Cancellation of 2.8% treasury shares in Sep-2023 30 3 Confidential For Qualifying Investors Only Open to Qualified Investors Only ASCENDER CAPITAL ASCENDER CAPITAL 3
ITFOR ATTRACTIVE VALUATION AT <5X EV/EBIT AT INITIAL INVESTMENT Total return since Ascender s initial investment in Oct-2021 160 October 2023 5.7x EV/EBIT 12.9x P/E 150 140 October 2021 May 2023 130 Ascender s initial investment Total return ratio doubled to 70% for FY23 Feb 2022 4.9x EV/EBIT 11.8x P/E 120 5 Yen special dividend and total return ratio raised to 40% 110 100 90 30 80 Oct-21 Feb-22 Jun-22 Oct-22 Feb-23 Jun-23 Oct-23 ITFOR (4743 JP) Topix Index Source: Bloomberg All data displayed accurate as of October 13th, 2023 4 Confidential For Qualifying Investors Only Open to Qualified Investors Only ASCENDER CAPITAL ASCENDER CAPITAL 4
