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SHIFT (TYO:3697) - Fundamental Investment Case

Research

Publication Date: 03 Nov 2019 - By Storm Research By Storm Research
Actionable
Differentiated

Equity Fundamental Equity Asia ex-China Telecom & Media

Robust FY 8/19 earnings were defined by existing business strength. Specifically customer growth, project growth & rising average project sizes.

SHIFT is literally turning business away as the merits of outsourced software testing, including accuracy, quality, speed & costs, are starting to be understood by an expanding client base.

Having worked on over 3,500 projects for over 1,000 clients SHIFT is undoubtedly Japan’s leading outsourced software testing operator. Yet in reality just 1% of software testing is currently outsourced, a figure we expect to rise as the benefits of using a specialist operator become more widely understood.

A key previous concern had been the issue of a MS warrant, but having been 100% converted the risk of ongoing dilution has gone with further financing to be achieved through debt.

Whilst acknowledging a degree of margin volatility is likely as funds raised are used for M&A, we believe SHIFT is in an exceptionally strong position to capitalise on its status as STaaS (Software Testing as a Service) market leader amidst a continued embrace of software to improve efficiency.

SHIFT TYO:3697 - Fundamental Investment Case

Source: Storm Research

Pages: 7

Released: 03 Nov 2019

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