System Location Co.,Ltd.

Business Details

Serving automotive finance companies and dealers as its main customers, the company provides cloud-based BPO services including a used-car asset valuation system (RV Doctor), a present-value calculation system (PV Doctor), and a new-car sales support system (CA Doctor). The majority of revenue is recurring (stock-type), giving the business a more stable earnings structure compared to flow-type businesses. Performance tends to move in tandem with trends in the domestic automotive market.

Recent Overview

Revenue and operating income increased, but net income declined due to a valuation loss on investment securities

For the full year of FY2026 (ending March 2026), the company achieved revenue of ¥1,733 million (up 4.0% year on year) and operating income of ¥604 million (up 12.7% year on year), representing increased revenue and profit. Cost of sales decreased 8.4% year on year due to the resolution of a one-time amortization burden in the prior period and the effects of in-house development and operation of systems, improving the profit margin. On the other hand, the recording of a ¥134 million valuation loss on investment securities caused net income attributable to owners of parent to decline to ¥297 million (down 10.2% year on year). In investing activities, the company spent ¥2,054 million on the acquisition of securities and investment securities, and the period-end balance of cash and cash equivalents decreased to ¥890 million (from ¥2,204 million at the end of the prior period).

Key Products

Growth Drivers

• Persistent demand for products and solutions from lease-related businesses and used-car dealers, sustaining an upward revenue trend
• Reduction in cost of sales (down 8.4% year on year): resulting from the resolution of a one-time amortization burden in the prior period and the effects of in-house development and operation of systems
• Strengthened competitiveness of CA Doctor (improved proposal quality, integration with business support systems, support for training new staff, etc.), generating favorable customer response and signs of recovery
• Promotion of new product development leveraging AI to enhance product functionality and contribute to more efficient operation and strengthening of the used-car business
• R&D investment and new business development in new fields through collaboration with investee companies, with an eye toward developing future core businesses
• A growing tendency among users to choose more affordable used cars amid rising new-car prices, which is expected to expand demand for used-car market services

Risks

• New passenger vehicle sales declined 2.2% year on year, falling below the prior-year level for the first time in four years, with registered vehicle sales remaining below prior-year levels for nine consecutive months since July, negatively affecting the customer base
• Rising prices and higher new-car sales prices are dampening consumer purchasing sentiment, pressuring the automotive market as a whole
• Risk that external policy changes, such as the abolition of the automobile environmental performance tax discount, could dampen demand by causing consumers to postpone purchases
• Risk that valuation losses on investment securities (¥134 million in the current period) could significantly reduce net income
• Because the business is stock-type in structure, the impact of cancellations and declines is fully reflected in performance over an extended period
• Risk of a shrinking customer base due to an increase in bankruptcies among small and micro used-car dealers
• Liquidity risk arising from a significant decrease in cash and cash equivalents (period-end balance of ¥890 million) due to large-scale investment in securities and investment securities (¥2,054 million)