Gungho Online Entertainment (3765) AI Stock Analysis

• Market Cap: ¥131.44B
• Dividend Yield: 2.38%
• Average Volume (3M): 141.23K
• Price to Earnings (P/E): 30.7
• Beta (1Y): 0.48
• Revenue Growth: -3.12%
• EPS Growth: -63.07%
• Country: JP
• Employees: 1,583
• Sector: Communication Services
• Sector Strength: 97
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 7.97
• Shares Outstanding: 69,161,415
• 10 Day Avg. Volume: 125,650
• 30 Day Avg. Volume: 141,233
• PEG Ratio: -0.55
• Price to Book (P/B): 1.58
• Price to Sales (P/S): 1.97
• P/FCF Ratio: 12.07
• 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: N/A
• Price Target Upside: N/A
• Rating Consensus: Hold
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 64 Neutral
• Price Target: ¥2,641.00 ▲(8.82% Upside)

The overall stock score of 64 reflects a combination of solid financial health and bearish technical indicators. The company's strong balance sheet and cash position provide stability, but the recent decline in revenue and bearish market momentum pose challenges. The valuation is somewhat high, but the dividend yield offers some compensation for investors.

Positive Factors

Balance Sheet Strength

A high equity ratio and minimal debt-to-equity indicate strong financial stability, providing resilience against economic downturns and flexibility for future investments.

Profitability Margins

Consistently high profitability margins reflect efficient cost management and pricing power, supporting long-term financial health and competitive positioning.

Cash Generation Ability

Strong cash generation supports ongoing operations, investment in growth opportunities, and potential shareholder returns, enhancing long-term business sustainability.

Negative Factors

Revenue Decline

A significant drop in revenue growth can hinder the company's ability to invest in new projects and maintain competitive edge, impacting long-term growth prospects.

Decreased Free Cash Flow

Reduced free cash flow limits the company's ability to fund new initiatives and return capital to shareholders, potentially affecting future growth and financial flexibility.

Net Profit Margin Decline

A declining net profit margin indicates potential challenges in cost control or pricing power, which could pressure future profitability and financial performance.

Gungho Online Entertainment Business Overview & Revenue Model

Company Description

Gungho Online Entertainment, Inc. (3765) is a Japanese video game developer and publisher known for its innovative mobile and online gaming solutions. Founded in 1998, the company operates primarily in the interactive entertainment sector, focusing on developing games for platforms such as smartphones and PCs. Its core products include popular mobile games like 'Puzzle & Dragons,' which blends puzzle mechanics with RPG elements, as well as other titles that cater to a diverse audience.

How the Company Makes Money

Gungho Online Entertainment generates revenue primarily through in-game purchases and microtransactions associated with its mobile and online games. The company offers free-to-play games that entice users to spend on virtual goods, character upgrades, and exclusive content. Additionally, Gungho earns revenue from game downloads and subscriptions where applicable. Strategic partnerships with other gaming firms and collaborations for cross-promotional campaigns further enhance its revenue streams. The company's strong brand recognition and successful game titles, especially in the mobile gaming sector, contribute significantly to its earnings.

Gungho Online Entertainment Financial Statement Overview

Summary

Gungho Online Entertainment demonstrates solid financial health with strong profitability margins and a robust balance sheet. However, the notable decline in revenue in 2024 suggests challenges in maintaining growth momentum. Despite this, the company's low leverage and strong cash position provide a buffer against potential risks, allowing for sustained operations and potential growth opportunities.

Income Statement

The company demonstrates strong profitability with a gross profit margin averaging around 50% over the years. However, the recent decline in total revenue from 125.3 billion in 2023 to 103.6 billion in 2024, a decrease of 17.3%, indicates a significant drop in revenue growth. Net profit margin also decreased from 13.1% in 2023 to 10.8% in 2024. Despite this, EBIT and EBITDA margins remain healthy, reflecting efficient cost management.

Balance Sheet

The company's balance sheet shows exceptional strength with a high equity ratio of approximately 73% in 2024, indicating low leverage and solid financial stability. The debt-to-equity ratio is minimal at 0.01, and a strong return on equity averaging around 12% over the years suggests efficient use of equity capital. The company's substantial cash reserves further enhance its financial stability.

Cash Flow

Cash flow analysis reveals a mixed performance. Although free cash flow decreased by 15% from 19.9 billion in 2023 to 16.9 billion in 2024, the company maintains a robust free cash flow to net income ratio, reflecting good cash generation relative to net income. The operating cash flow to net income ratio remains strong, indicating consistent cash flow from operations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	100.53B	103.60B	125.31B	105.50B	104.63B	98.84B
Gross Profit	48.85B	53.41B	56.97B	58.42B	61.06B	55.35B
EBITDA	12.67B	20.81B	30.96B	29.94B	37.64B	29.46B
Net Income	5.81B	11.17B	16.43B	19.02B	22.88B	16.37B
Balance Sheet
Total Assets	168.58B	175.46B	168.04B	152.21B	134.93B	122.25B
Cash, Cash Equivalents and Short-Term Investments	136.83B	104.62B	140.03B	127.21B	116.46B	102.72B
Total Debt	1.35B	759.00M	722.00M	489.00M	508.00M	614.00M
Total Liabilities	20.22B	21.93B	18.55B	19.38B	16.26B	17.53B
Stockholders Equity	122.46B	128.77B	128.76B	118.38B	108.40B	97.51B
Cash Flow
Free Cash Flow	0.00	16.89B	19.90B	18.23B	22.98B	21.57B
Operating Cash Flow	0.00	17.13B	20.51B	18.66B	23.65B	24.21B
Investing Cash Flow	0.00	-47.59B	-14.61B	-2.79B	-5.41B	-6.47B
Financing Cash Flow	0.00	-12.22B	-7.03B	-9.27B	-12.39B	-4.71B

Gungho Online Entertainment Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2427.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3765, the sentiment is Negative. The current price of 2427 is below the 20-day moving average (MA) of 2447.35, below the 50-day MA of 2506.99, and below the 200-day MA of 2760.60, indicating a bearish trend. The MACD of -23.41 indicates Negative momentum. The RSI at 43.80 is Neutral, neither overbought nor oversold. The STOCH value of 28.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3765.

Gungho Online Entertainment Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2432	78 Outperform	¥282.46B	6.51	17.98%	2.52%	34.16%	―
2121	66 Neutral	¥176.13B	10.65	9.54%	4.66%	1.14%	77.07%
3765	64 Neutral	¥131.44B	30.71	3.38%	2.38%	-3.12%	-63.07%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
3932	60 Neutral	¥38.84B	18.70	―	4.02%	-15.30%	39.61%
3632	54 Neutral	¥71.46B	17.67	4.14%	2.12%	-2.61%	116.80%
3903	46 Neutral	¥17.49B	6.12	―	―	-37.68%	―

Gungho Online Entertainment Corporate Events

GungHo Online Entertainment Reports Decline in Q3 Financial Performance

GungHo Online Entertainment reported a significant decline in its financial performance for the third quarter of the fiscal year ending December 31, 2025. The company experienced a decrease in net sales, operating profit, and net profit compared to the previous year, highlighting challenges in its operating environment. Despite maintaining a stable shareholder’s equity ratio, the company has not disclosed its full-year earnings forecast, indicating uncertainty in its market conditions.

GungHo Online Entertainment Settles Misconduct Case with Counterparty

GungHo Online Entertainment, Inc. has reached a settlement with a counterparty involved in a misconduct case where a former employee improperly paid outsourcing fees, resulting in a financial loss of approximately 100 million yen. The settlement includes a lump-sum repayment of 70 million yen and the remaining balance to be paid in installments, with the overall impact on the company’s financial results expected to be minimal.