Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

Equity Bottom-Up

<ul>
<li>A massive shortage of IT professionals combined with Shift's overwhelming dominance of the labor market should drive 20% annual revenue growth through 2030. </li>
<li>But Shift missed consensus profitability estimates 3 consecutive quarters, and the share price is down 67% in 12 months, compared to an 18% rise in the median peer. </li>
<li>In our view, a recovery in profitability is already underway, and shares are at least 45% undervalued</li>
</ul>


A massive shortage of IT professionals combined with Shift's overwhelming dominance of the labor market should drive 20% annual revenue growth through 2030. 
But Shift missed consensus profitability estimates 3 consecutive quarters, and the share price is down 67% in 12 months, compared to an 18% rise in the median peer. 
In our view, a recovery in profitability is already underway, and shares are at least 45% undervalued


Shift (3697): Profitability Rebound Underway

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shift-inc" target="_blank" data-smartkarma-citation="entities:7266:1" rel="noopener">Shift Inc (3697 JP)</a> is a high-growth stock in the software services, testing, consulting, development business. They have a big specialist TAM ahead of them. </li>
<li>Revenue is up 50-fold in 10 years. OP is up 85-fold in that period. Revenue is guided +17.5% in the year to Aug 2025. OP is guided +28%.</li>
<li>There is an event coming up shortly which could trigger an imminent index inclusion. It's worth a look.</li>
</ul>



Shift Inc (3697 JP) is a high-growth stock in the software services, testing, consulting, development business. They have a big specialist TAM ahead of them. 
Revenue is up 50-fold in 10 years. OP is up 85-fold in that period. Revenue is guided +17.5% in the year to Aug 2025. OP is guided +28%.
There is an event coming up shortly which could trigger an imminent index inclusion. It's worth a look.


SHIFT (3697) The Next - Potential Big Index Add

<ul>
<li>Shift reported a 95% increase in OP, to ¥3.2bn, compared to consensus estimate of ¥2.6bn on January 14 after the close.</li>
<li>Just under 5 months ago, we suggested the stock was about 45% undervalued. It is up 40%.</li>
<li>We still expect 20% annual growth through 2030. This is no longer a turnaround stock, but now one of the most solid growth stocks in the market.</li>
</ul>


Shift reported a 95% increase in OP, to ¥3.2bn, compared to consensus estimate of ¥2.6bn on January 14 after the close.
Just under 5 months ago, we suggested the stock was about 45% undervalued. It is up 40%.
We still expect 20% annual growth through 2030. This is no longer a turnaround stock, but now one of the most solid growth stocks in the market.


Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shift-inc" target="_blank" data-smartkarma-citation="entities:7266:1" rel="noopener">Shift Inc (3697 JP)</a> reported 3QFY08/2025 results last week, with solid top-line and earnings growth. 3Q revenue fell below consensus while OP beat consensus by a huge margin.</li>
<li>The margin drop in 3Q was only due to seasonality and not due to operational inefficiencies. Shift also raised its full-year OP guidance which seems too conservative.</li>
<li>The market overreacted to Shift’s 3Q earnings with a 10% drop; however, the share price has begun to move up as there is no reason to panic.</li>
</ul>



Shift Inc (3697 JP) reported 3QFY08/2025 results last week, with solid top-line and earnings growth. 3Q revenue fell below consensus while OP beat consensus by a huge margin.
The margin drop in 3Q was only due to seasonality and not due to operational inefficiencies. Shift also raised its full-year OP guidance which seems too conservative.
The market overreacted to Shift’s 3Q earnings with a 10% drop; however, the share price has begun to move up as there is no reason to panic.


Shift 3Q: OP Beat with Upgrade to Guidance; Share Price on a Recovery

Research Coverage of Japanese Listed Companies, Shared Research Inc

Shared Research

Research Coverage of Japanese Listed Companies

Shared Research Inc

Pioneering research coverage of Japanese listed companies. Now customizable and interactive for global institutional investors. Corporate access reimagined.

<ul><li>In cumulative Q3 FY08/25, the company reported sales of JPY95.4bn, gross profit of JPY33.0bn, and operating profit of JPY11.9bn.</li><li>Software Testing Related Services segment sales reached JPY61.9bn, with gross profit at JPY22.8bn and operating profit at JPY16.2bn.</li><li>The revised full-year forecast for FY08/25 anticipates sales of JPY130.0bn and operating profit of JPY15.0bn.</li></ul>

In cumulative Q3 FY08/25, the company reported sales of JPY95.4bn, gross profit of JPY33.0bn, and operating profit of JPY11.9bn.Software Testing Related Services segment sales reached JPY61.9bn, with gross profit at JPY22.8bn and operating profit at JPY16.2bn.The revised full-year forecast for FY08/25 anticipates sales of JPY130.0bn and operating profit of JPY15.0bn.

Shift Inc (3697 JP): Q3 FY08/25 flash update

Japan

SHIFT Inc. offers information technology outsourcing services. The Company provides outsourcing software testing services to corporations and individual clients. SHIFT also provides software solutions and consulting services, as well as educational classes and programs.

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Shift Inc (3697 JP)

Shift (3697): Profitability Rebound Underway

Japan's massive shortage of IT professionals and Shift's dominance of the IT labor market should sustain 20% annual sales growth. Profit could grow...

Michael Allen

SHIFT (3697) The Next - Potential Big Index Add

SHIFT has gone through earnings, surprised to the upside, and is up 10% since when I wrote. The 15:1 stock split which a) makes the Nikkei 225...

Travis Lundy

Shift Beats Q1 Consensus by 30%

Shift's impressive 95% increase in operating profit exceeded expectations, with the stock now up 40% and poised for continued 20% annual growth...

Michael Allen

Shift Inc (3697 JP): Q3 FY08/25 flash update

In cumulative Q3 FY08/25, the company reported sales of JPY95.4bn, gross profit of JPY33.0bn, and operating profit of JPY11.9bn. Software Testing...

Shared Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Shift (3697): Profitability Rebound Underway

Japan's massive shortage of IT professionals and Shift's dominance of the IT labor market should sustain 20% annual sales growth. Profit could grow...

Michael Allen

SHIFT (3697) The Next - Potential Big Index Add

SHIFT has gone through earnings, surprised to the upside, and is up 10% since when I wrote. The 15:1 stock split which a) makes the Nikkei 225...

Travis Lundy

Shift Beats Q1 Consensus by 30%

​Shift's impressive 95% increase in operating profit exceeded expectations, with the stock now up 40% and poised for continued 20% annual growth...

Michael Allen

Shift 3Q: OP Beat with Upgrade to Guidance; Share Price on a Recovery

​Market overreacted to Shift's earnings with 10% drop. 3Q is an off-season for Shift, however, earnings were decent. Share price has started to...

Shifara Samsudeen, FCMA, CGMA

Shift Inc (3697 JP): Q3 FY08/25 flash update

In cumulative Q3 FY08/25, the company reported sales of JPY95.4bn, gross profit of JPY33.0bn, and operating profit of JPY11.9bn. Software Testing...

Shared Research

Shift's impressive 95% increase in operating profit exceeded expectations, with the stock now up 40% and poised for continued 20% annual growth...

Market overreacted to Shift's earnings with 10% drop. 3Q is an off-season for Shift, however, earnings were decent. Share price has started to...