Nasdaq (NASDAQ) · Industrials
SBC Medical Group Holdings Inc SBC
MonitorScore band: 50–60
The thesis, in one sentence
A capital-light medical services organization on a very low enterprise multiple with a high cash yield, but almost all revenue comes from affiliated corporations controlled by the chief executive's family, who have already cut the discretionary fee once.
Written for this site in plain English, without figures. The arithmetic is in the full report.
The thesis is from the deep report of 2026-08-17; the verdict badge reflects the latest scoring of 2026-09-06.
Key risks
- Almost all revenue comes from corporations controlled by the founder's family
- The discretionary fee has already been cut once and can be cut again
- Net cash has gone into mediocre acquisitions, not dividends or buybacks
What would change the verdict
- Revenue falls as the affiliated fee is cut again
- Free cash flow yield falls below the normalized owner-earnings base
- Net debt appears as acquisitions consume the cash
- Operating margin falls for two consecutive quarters
Read it yourself
Step five of the method is the reader's: open the latest annual or quarterly report and read it before acting on anything here. A score is a summary, and a summary is not understanding.
Next report expected 2026-11-12. The deep report was written against the filings available on 2026-08-17; anything published since is not in it.
Price, one year
Where the money goes
Last four reported quarters, 2025-06 → 2026-03, in USD. Filings data as gathered on 2026-08-17. Figures rounded to three significant digits.
Open this week — scorecard, figures and executive summary
This ticker's exact score, its 30-criterion scorecard with the evidence behind each score, the DCF and Monte Carlo figures and the report's executive summary are open to everyone this week, no email required. The chapters after the summary are not — the demo ticker shows what a complete report looks like.
| Score | 50.8% (weighted sum out of 60 points) |
|---|---|
| DCF (min / base / max) | -7% / 11% / 63% |
| P(undervalued) | 98.5% (20,000 simulations) |
| p5 | p10 | p25 | p50 | p75 | p90 | p95 |
|---|---|---|---|---|---|---|
| 11.7% | 20.9% | 38.7% | 63.2% | 93% | 126.9% | 150.7% |
Percentiles, as a percentage margin against the reference price.
scenarios below today's pricescenarios above today's pricetoday's pricerange of the DCF modelsbase case
Scorecard — all 30 criteria
| # | Criterion | Evidence | Score |
|---|---|---|---|
| Graham | |||
| 1 | Current earnings multiple, against its own sectorpriced in the cheapest tier of its own sector | P/E 7,66x on LTM EPS 0,478 USD (9,0x on normalized EPS 0,41) - well below the 30th percentile of healthcare services | 1 |
| 2 | Price to book — or cash generation, for intangible-heavy sectorsbook multiple low by the standards of its sector; for technology, semiconductors, pharma and e-commerce a high free-cash-flow yield replaces it, because book value means little there | P/B 1,42x (BVPS 2,572 USD) < 1,5x | 1 |
| 3 | Earnings multiple times book multiplethe combined earnings-and-book multiple below a Graham-style ceiling | P/E x P/B = 7,66 x 1,42 = 10,9 < 22,5 | 1 |
| 4 | Dividend actually paida dividend paid without interruption over the last five years | Has never paid a dividend | 0 |
| 5 | Dividend yielda dividend yield well above what the average listed company pays | Dividend yield 0% | 0 |
| 6 | Leveragedebt below equity, or a net cash position; for banks and insurers this is judged on regulatory capital instead | Interest-bearing debt 37,9M / equity 263,8M = 0,14x; net cash 146,7M USD | 1 |
| 7 | Return on invested capital against the cost of that capitalreturns on invested capital clearly above what the capital costs; not computable for financials, which is why their denominator differs | ROIC = EBIT LTM 65,4M x 0,60 / capital employed 133,2M = 29,5% > 20% | 1 |
| 8 | Earnings growth over five yearsearnings per share higher than they were five years ago | Only 3 years of consolidated history: EPS 0,42 (2023) -> 0,48 (2024) -> 0,50 (2025), LTM 0,478; rising, but without the 5-year series | 0.5 |
| 9 | Consistency of profitprofitable in every one of the last five years | Positive profit in all 3 documented years; 5 years cannot be verified (SPAC listing in 09.2024) | 0.5 |
| 10 | Price against the Graham Numberprice below the Graham Number computed from earnings and book value | Graham Number = sqrt(22,5 x 0,478 x 2,572) = 5,26 USD; price 3,66 = 30,4% below GN | 1 |
| Buffett | |||
| 11 | A durable moata competitive advantage that is clear and defensible — brand, network, switching cost, licence or cost position | Real scale in sourcing (287 locations) + a 26-year-old brand, but the contract with the MCs is not a moat, it is dependence on a single family | 0.5 |
| 12 | How long the moat lastsan advantage that should still be standing a decade from now | Regulatory risk from the MSO structure (Japanese law bans corporate ownership of clinics) + Japan's demographics + Korean competition | 0.5 |
| 13 | Return on equity, sustaineda high return on equity held for years without leaning on debt, measured after one-off gains are normalised away | ROE 27,6% (2024) / 23,0% (2025) / 19,1% (LTM), unlevered | 1 |
| 14 | Margins against the sectornet or operating margins above the sector average, by a clear gap | Operating margin 37-39% vs the healthcare services sector's 5-10% | 1 |
| 15 | Quality of managementa management team with a long track record of allocating capital well | Material control weaknesses two years in a row, precisely on related-party matters; a 1,6M USD salary to the CEO's mother not identified in time; the company paid ~1,3-1,4M of the costs of the CEO's share sale; CEO salary 12M USD = 23,5% of net profit | 0 |
| 16 | Skin in the gamemanagement owns a meaningful part of the company and is not selling | Holds 81,7% of the votes, but sold 3,1M shares at 3,25 USD in April 2026 (with the company paying the offering costs) | 0.5 |
| 17 | Predictabilitya business simple enough that next year can be reasoned about | Revenue -15,5% (2025) then +1,7%, at the unilateral decision of the same person who also controls the clients | 0 |
| 18 | Retained earnings put to workevery unit of profit kept in the business creates more than a unit of value | Bought back at 4,88 USD in 2025, zero buybacks in H1 2026 at 2,87-4,53 USD out of a 20M program; 20M USD in OrangeTwist already at a loss; 184M cash unused | 0 |
| 19 | Pricing powerable to pass inflation on to customers without losing them | Price/clinic visit +9% year/year (real), but SBC itself cut the franchise fee by 24,7% in 2025 | 0.5 |
| 20 | Margin of safety against the valuation modelsprice meaningfully below where the triangulated models put intrinsic value; for banks the dividend discount model is used, never analyst consensus | Median of the 5-model triangulation +11% (range -7% ... +63%) < the 20% threshold; only the mechanical Monte Carlo model gives +63% | 0.5 |
| Lynch | |||
| 21 | Growth against the multiple paid for itthe multiple paid is small relative to the growth rate bought | PEG 2,62 (ttm) > 1 | 0 |
| 22 | Rate of profit growthearnings per share compounding fast over the last three years, after one-off and cyclical gains are normalised away | EPS 0,42 -> 0,50 = +9,1%/year, and LTM (0,478) is below FY2025; normalized for the 14M one-off gains, nearly flat | 0 |
| 23 | Fits a Lynch categoryclearly a fast grower, a stalwart or an asset play — not an ambiguous cyclical or a risky turnaround | Declared turnaround (restructuring complete) after a 15,5% revenue decline | 0 |
| 24 | An unfashionable corner of the marketin a business or a sector nobody is excited about | Japanese aesthetic clinics listed in the US - a niche sector, but with 5-7 active analysts | 0.5 |
| 25 | A story that can be told simplythe investment case can be explained in a couple of minutes, without jargon | The model is explainable in 2 minutes; the network of 24 declared related parties is not | 0.5 |
| 26 | Insider ownershipfounders or insiders hold a large stake and have been buying, not selling | Holds 81,7% but SELLS (3,1M shares in April 2026), and the company is not buying | 0 |
| 27 | A solid balance sheetnet cash, or debt far below equity | Net cash 146,7M USD, current ratio 3,31x, bank debt at 0,65-1,2%/year | 1 |
| 28 | Market sharetaking share from competitors rather than merely defending it | 287 locations (+34 year/year), 6,9M LTM visits (+10%), ~31% of the locations of medium/large groups in Japan | 1 |
| 29 | Analyst coveragefollowed by few institutional analysts, if any | 5-7 analysts, all small boutiques; Maxim Group, which publishes estimates, was the sole bookrunner of the CEO's share sale | 1 |
| 30 | Dilution from share-based payshare-based compensation consumes only a marginal slice of revenue each year | Stock-based compensation 0 USD in FY2025 and 7.854 USD in H1 2026 - below 0,01% of revenue | 1 |
Subtotals
| Graham | 7 |
|---|---|
| Buffett | 4.5 |
| Lynch | 5 |
| Total (30) | 16.5 |
| Score | 50.8% / 60 |
Executive summary, with figures
SBC Medical Group Holdings Incorporated (NASDAQ: SBC) — deep-value analysis
Analysis date: August 17, 2026 · Reference price: $3.66 (close 08.14.2026, yfinance) · Market cap: $375.4M · Shares: 102,576,943 · Reporting currency: USD (operations in JPY) · Auditor: MaloneBailey LLP, Tokyo (since 2023)
Primary sources: 10-K FY2025 filed 03.27.2026 · 10-Q Q1 2026 filed 05.14.2026 · 10-Q Q2 2026 filed 08.13.2026 · 10-K FY2024 filed 03.28.2025 · DEF 14A filed 05.28.2026 · 424B7 filed 04.17.2026 · 8-K/EX-99.1 of 08.13.2026 · the automated data pack · the research brief · Monte Carlo the Monte Carlo simulation.
Executive summary (1 page: thesis, estimated value, verdict)
SBC Medical Group Holdings is a management services organization (MSO) that collects franchise, procurement, management-services and equipment-leasing fees from a group of Japanese medical corporations operating aesthetic clinics under the "Shonan Beauty Clinic" brand. The figure that defines the company is neither margin nor growth: 91.5% of FY2025 revenue ($158,860,970 of $173,607,489) came from affiliated parties — medical corporations whose "members" (the holders of voting rights) are relatives of CEO Dr. Yoshiyuki Aikawa, who in turn controls 81.7% of SBC's votes (10-K FY2025, Note 20 and the income statement, p. F-5; DEF 14A 05.28.2026). Service pricing is set, on both sides of the table, by the same person.
It's not an abstraction. In April 2025 management revised the fee structure toward affiliated clinics; the effect was a 15.48% drop in consolidated revenue, from $205,415,542 to $173,607,489, with franchise revenue falling 24.72% and management-services revenue 44.22% (10-K FY2025, Item 7). In August 2026, the same management announced fee increases that "would be expected to add approximately $15 million annually" (release 08.13.2026, EX-99.1). Therefore, this company's top line is not a market outcome; it's an internal allocation decision between the pockets of the same owner. This is the core of the thesis and of the risk alike.
Beneath this layer, the underlying asset is healthy and cheap. The network has reached 287 locations (+34 y/y), 6.9 million visits over the trailing 12 months (+10%) and an average spend per visit of $287 (+9%) (EX-99.1, 08.13.2026). LTM operating margin is 37.3%, ROIC (after-tax EBIT / capital employed) is approximately 29.5%, and the balance sheet has $184.3M cash against $37.9M interest-bearing debt as of 06.30.2026 — $146.7M net cash, i.e. 39% of market cap. Enterprise value is therefore ~$229M for an asset generating ~$65M annual EBIT: 3.5× EV/EBIT. On the surface, absurdly cheap.
My FCF bridge (detail in the valuation chapter) starts from CFO and subtracts real capex (including advances for fixed assets, which the automated bridge doesn't see) and lease principal, then normalizes for non-recurring gains and FX. Result: normalized owner earnings of $39.0 million — below the $60.6M of gross trailing-12-month FCFE (inflated by an $11.2M tax deferral in H1 2026 and by the end of the affiliated-party float drain) and above the gross average of the last three years ($26.6M, depressed by the same drain). The 10.4% yield on market cap is consistent with what brokers publish (2026 consensus: EPS $0.45, i.e. ~$46M net profit — my figure is 15% more conservative).
The triangulated valuation gives a range of $3.39–$5.97 per share, with a central point around $4.05–4.40. Monte Carlo over the mechanical DCF (20,000 scenarios, OE $39M, g1 6%, r 12%, gt 2%) returns a median intrinsic value of $5.97 and a 98.5% probability the stock is undervalued. This probability must be read correctly: it measures flow uncertainty, not the risk that the flows never reach the minority shareholder. The four models incorporating this latter risk (bear, EPV, governance-adjusted, own multiples) cluster between −7% and +26% MOS, with a median of +11%.
Verdict: SPECULATIVE-MONITOR. My calculated GBL score (the tracker doesn't yet have one — see the final chapter) is 50.8%, in the MONITOR band. The cheapness is real and measurable; the discount is, however, earned, not mistaken. Documented in the filings, in just 18 months: two consecutive fiscal years with unremediated material weaknesses in internal control, exactly around the related-party transaction approval process; a $12,000,000 salary for the CEO in 2025 (23.5% of net profit); a $1.6M salary for the CEO's mother, not timely identified as a related-party transaction; a plane sold to a CEO entity, later marked up $10.35M, booked to equity, not to profit; a subsidiary guarantee on the CEO's personal debt; and — most tellingly — the company paid ~$1.3–1.4 million of the costs for the secondary offering through which the CEO sold 3.1 million of his shares in April 2026, while the company's own $20M buyback program, authorized in December 2025, bought back zero shares in the first six months of 2026.
Position sizing must reflect that the thesis depends on the behavior of a single person, not a business model. A small position, with a clear tracking thesis: the first buyback actually executed from the $20M program would be the signal that validates the thesis; a new downward "fee structure revision" would be the signal that breaks it.
That is chapter one of the deep report, figures included. Chapters two onwards stay closed for the five open tickers. See what a complete analysis looks like — this week's demo ticker: SNT Energy Co., Ltd. (100840) →
Full report contents
- Executive summary (1 page: thesis, estimated value, verdict)
- 🔒 The business and the moat (how it makes money, competitive advantage, durability) (Available in the full report)
- 🔒 Management and capital allocation (track record, buybacks/dividends/acquisitions, skin in the game) (Available in the full report)
- 🔒 What changed over the last 4 quarters (balance sheet item by item from the data pack, margins, cash conversion — explaining EVERY large variation) (Available in the full report)
- 🔒 Balance sheet analysis — Quality of Earnings (Thornton O'Glove method) (Available in the full report)
- 🔒 CEO profile — Outsider traits (William Thorndike method) (Available in the full report)
- 🔒 Accounting red flags (accruals, dilution, one-offs, accounting policy changes) (Available in the full report)
- 🔒 Triangulated valuation (conservative DCF with explicit assumptions + earnings power value + 5-year historical multiples + Monte Carlo from step 5; a range, not a point) (Available in the full report)
- 🔒 Pre-mortem (why the thesis could be wrong — 3 concrete scenarios) (Available in the full report)
- 🔒 Verdict compared to the tracker's GBL score (convergence/divergence and why) (Available in the full report)
See what a complete analysis looks like — this week's demo ticker: SNT Energy Co., Ltd. (100840) →
Evaluation history
| Date | Verdict |
|---|---|
| 2026-07-12 | Interesting |
| 2026-08-17 | Monitor |
| 2026-09-06 | Monitor |
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The scorecard, the valuation figures and the executive summary are open to everyone this week; the remaining chapters are not. Subscribers get one full deep report a week by email, the day before it opens here — and the weekly list of what cleared the filters.