Daily Brief Japan: Avant Corp, Simplex Holdings, ID Holdings and more

In today’s briefing:

Avant Group (3836) – Evolutionary Challenges with Software-Driven Strategy

Continuing DX tailwinds and developmental hurdles – Q1-2 FY6/2024 results highlighted continued demand for DX solutions, combined with a stable uptick for Consolidated Financial Solutions driven by outsourcing.
With 11.6% sales growth YoY and operating profit growth YoY at a slower pace of 5.4%, the company is maintaining its course by investing in a software-driven strategy.
A fundamental element is the development of the Management Solutions segment which currently faces challenges in building up a pipeline, and the company has identified some necessary changes in sales activity.

Q1-3 FY3/2024 results were in line with unchanged FY company guidance, with the company displaying 1) sustained growth in Strategic/DX Consulting demand and System Integration, 2) ongoing successful business expansion into new market sectors, and 3) management achieving a delicate equilibrium between actively generating current growth and investing for the long-term success of the business.
Although DX will remain a structural tailwind for some time to come, the company’s growth potential will be underpinned by access to high-caliber hires at both graduate and mid-career levels.
We believe the announcement of a business and capital partnership with CIRCULATION (7379) points in the right direction in establishing a channel to a quality talent pool.

Q1-3 FY3/2024 results were ahead of FY company guidance which remained unchanged, positioning the company for a robust year-end in our view.
The key earnings drivers remain DX-related, having a positive impact on sales growth and profitability improvements in Cybersecurity, Consulting and Training, and IT Infrastructure segments.
ID Holdings’ objectives of strengthening its DX-related offerings, developing effective vendor partnerships, optimizing administrative operations, and shifting human resources to profit centers continue to yield positive results.

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