5570 Jenoba

Jenoba sells a paid signal that tells machines exactly where they are, to the centimeter — used by surveyors, construction equipment, farm tractors, and drones. Subscribers grow about 6% a year.

▲ Trial projects with KDDI — drone delivery, self-driving, tourist guides — are turning into paid services added on top of the subscriber base.  ▼ The government broadcasts a free positioning signal that keeps improving. If it gets good enough for basic farm and survey work, entry-level subscribers leave.

All of Jenoba's base-station data comes from one supplier — the Japan Surveying Association, the only licensed commercial seller. The price has been stable for 24 years.

▲ Any new competitor would have to buy the exact same data from the same supplier, so it would start with no advantage. Margins exceed 55%.  ▼ Jenoba has no bargaining power against its only supplier, and says so in its own annual report. One price increase could squeeze margins permanently.

Cash of ¥3bn equals about a third of the company's market value. There was one big buyback in 2024, but the dividend payout is under 17% and three years of acquisition talk produced nothing.

▲ The 2024 buyback shows management will act. Money put back into this business earns about 23% — ¥500 million deployed would add real profit.  ▼ The founding family faces no outside pressure. The cash sits in securities earning about 1.2% while the dividend creeps up a point at a time.

The business sells for 6.7 years of operating profit. Its capital earns 22.9%. Net cash is 36.8% of the market cap; 17.1% of profit goes out as dividends. Today's dividend yield is 1.1%. If the company paid out all of its profit, the yield at today's price would be 6.6% — past the 6% level where Japanese small caps tend to find buyers. Raising the payout 10 points a year would reach 6% in about 7.4 years. At the current payout, the cash pile alone equals today's market cap in about 11.6 years. How this valuation floor works →