DIGITAL HEARTS HOLDINGS Co., Ltd. (3676) AI Stock Analysis

• Market Cap: ¥20.25B
• Dividend Yield: 2.24%
• Average Volume (3M): 59.19K
• Price to Earnings (P/E): 33.1
• Beta (1Y): 0.84
• Revenue Growth: 2.47%
• EPS Growth: 255.70%
• Country: JP
• Employees: 1,870
• Sector: Technology
• Sector Strength: 91
• Industry: Information Technology Services
• EPS (TTM): -33.22
• Shares Outstanding: 23,890,800
• 10 Day Avg. Volume: 47,300
• 30 Day Avg. Volume: 59,186
• PEG Ratio: -0.54
• Price to Book (P/B): 2.31
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: ¥999.00
• Price Target Upside: 5.71% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 0

• Rating: 73 Outperform
• Price Target: ¥1,044.00 ▲(10.48%Upside)

DIGITAL HEARTS HOLDINGS Co., Ltd. scores well on financial performance due to its strong revenue growth and efficient cash flow management, which are significant strengths. However, the stock's technical indicators suggest a lack of strong momentum, and the high P/E ratio indicates potential overvaluation risks. The dividend yield offers some compensation but does not fully offset valuation concerns.

DIGITAL HEARTS HOLDINGS Co., Ltd. Business Overview & Revenue Model

Company Description

DIGITAL HEARTS HOLDINGS Co., Ltd. is a Japanese company specializing in quality assurance services for digital content, primarily in the gaming and entertainment sectors. The company offers a range of services including debugging, testing, and localization to ensure that digital products meet quality standards and are tailored for international markets. It operates across various regions, serving both domestic and international clients.

How the Company Makes Money

The company generates revenue primarily through providing quality assurance services, including debugging and testing for video games and other digital content. DIGITAL HEARTS HOLDINGS Co., Ltd. charges clients for its testing and debugging services, which are essential for ensuring the quality and functionality of digital products before they reach the market. Additionally, the company offers localization services, helping clients adapt their products for different languages and cultural contexts, further expanding their market reach. Partnerships with major gaming companies and continuous demand for high-quality digital content are significant factors contributing to the company's earnings.

DIGITAL HEARTS HOLDINGS Co., Ltd. Financial Statement Overview

Summary

DIGITAL HEARTS HOLDINGS Co., Ltd. demonstrates strong financial performance with consistent revenue growth and improving profitability margins. The company maintains a stable financial position with efficient cash flow management, although potential risks exist due to significant debt levels.

Income Statement

DIGITAL HEARTS HOLDINGS Co., Ltd. has demonstrated robust revenue growth, with a revenue increase from ¥21.1 billion in 2020 to ¥39.7 billion in 2025. The gross profit margin remains healthy at around 25.5% in 2025, indicating efficient cost management. Net profit margin improved significantly, reaching 1.6% in 2025 from a low of 0.5% in 2024, showcasing enhanced profitability. EBIT and EBITDA margins have also shown positive trends, suggesting strong operational performance.

Balance Sheet

The company maintains a strong equity base with a debt-to-equity ratio of 0.58 in 2025, reflecting a balanced capital structure. ROE improved to 7.03% in 2025, demonstrating effective use of equity capital. The equity ratio stands at 44.9%, indicating a solid financial position with a substantial portion of assets financed by equity, reducing financial risk. However, the total debt level remains significant, which could pose potential risks if not managed carefully.

Cash Flow

The operating cash flow to net income ratio is robust, indicating strong cash generation relative to net income. Free cash flow has grown steadily, with a significant increase in free cash flow from ¥829 million in 2020 to ¥2.69 billion in 2025. The free cash flow to net income ratio is favorable, suggesting efficient conversion of profits to cash flows. Overall, the company's cash flow management appears effective, supporting its operational and strategic needs.

Breakdown	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	39.75B	38.79B	36.52B	29.18B	22.67B
Gross Profit	10.14B	10.09B	10.63B	8.39B	6.43B
EBITDA	2.70B	1.91B	3.18B	3.49B	1.92B
Net Income	629.46M	176.93M	799.55M	1.78B	974.49M
Balance Sheet
Total Assets	19.95B	21.10B	19.58B	17.57B	14.34B
Cash, Cash Equivalents and Short-Term Investments	7.59B	6.90B	6.50B	5.24B	5.23B
Total Debt	5.20B	7.10B	5.11B	5.59B	4.80B
Total Liabilities	10.69B	12.25B	10.11B	9.99B	8.02B
Stockholders Equity	8.95B	8.42B	8.81B	7.00B	5.70B
Cash Flow
Free Cash Flow	2.69B	946.83M	1.82B	2.70B	1.10B
Operating Cash Flow	3.12B	1.76B	2.85B	3.08B	1.42B
Investing Cash Flow	-147.41M	-2.37B	-1.90B	-2.54B	-1.81B
Financing Cash Flow	-2.41B	934.08M	141.47M	-546.57M	1.73B

DIGITAL HEARTS HOLDINGS Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 945.00
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3676, the sentiment is Negative. The current price of 945 is below the 20-day moving average (MA) of 952.50, above the 50-day MA of 931.38, and above the 200-day MA of 905.22, indicating a neutral trend. The MACD of -3.76 indicates Positive momentum. The RSI at 46.39 is Neutral, neither overbought nor oversold. The STOCH value of 55.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3676.

DIGITAL HEARTS HOLDINGS Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3788	74 Outperform	¥23.90B	33.05		1.76%	7.60%	-6.99%
2185	73 Outperform	¥20.06B	9.49		1.59%	4.16%	36.43%
3676	73 Outperform	¥20.25B	33.13		2.24%	2.47%	255.70%
6572	73 Outperform	¥22.89B	40.15		0.82%	13.86%	―
6199	70 Outperform	¥21.21B	11.91		0.85%	11.33%	24.80%
Sector *	57 Neutral	HK$14.36B	5.83	-5.77%	4.76%	9.65%	-43.80%
3657	55 Neutral	¥13.22B	―		4.29%	10.47%	63.47%

DIGITAL HEARTS HOLDINGS Co., Ltd. Corporate Events

DIGITAL HEARTS HOLDINGS Reports Growth in Fiscal Year 2025

DIGITAL HEARTS HOLDINGS Co., Ltd. reported a 2.5% increase in net sales for the fiscal year ending March 31, 2025, with significant growth in operating income and profit attributable to owners of the parent. The company’s financial position improved with a higher shareholders’ equity ratio and increased cash and cash equivalents. The announcement reflects a positive impact on the company’s operations, showcasing resilience and strategic growth, which could enhance its industry positioning and offer favorable implications for stakeholders.

DIGITAL HEARTS HOLDINGS Reports Significant Extraordinary Losses

DIGITAL HEARTS HOLDINGS Co., Ltd. reported an extraordinary loss of 1,184 million yen due to a significant decline in the value of its investment securities. This loss impacted the company’s financial results for the fiscal year ending March 31, 2025, leading to a substantial shortfall in profit attributable to owners of the parent. Despite steady project acquisition by its business groups, the company’s net income fell significantly compared to forecasts and the previous fiscal year, primarily due to these extraordinary losses.