Drecom Co., Ltd. (3793) AI Stock Analysis

• Market Cap: ¥12.11B
• Dividend Yield: N/A
• Average Volume (3M): 106.72K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.94
• Revenue Growth: 93.85%
• EPS Growth: -216.24%
• Country: JP
• Employees: 369
• Sector: Communication Services
• Sector Strength: 97
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): -19.48
• Shares Outstanding: 29,446,213
• 10 Day Avg. Volume: 96,340
• 30 Day Avg. Volume: 106,716
• PEG Ratio: 0.01
• Price to Book (P/B): 3.48
• Price to Sales (P/S): 1.30
• P/FCF Ratio: 26.24
• 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: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 42 Neutral
• Price Target: ¥388.00 ▼(-3.00% Downside)

The most significant factors affecting Drecom Co., Ltd.'s stock score are its financial performance and technical analysis. The company's financial statements reveal challenges in revenue growth and profitability, along with increased leverage. Technically, the stock is in a bearish trend, trading below major moving averages, with an oversold RSI but negative MACD momentum. The valuation is impacted by a negative P/E ratio, reflecting current losses.

Positive Factors

Diversified monetization streams

Multiple durable revenue channels — in‑app purchases, ad revenue and development/partnership services — reduce dependence on any single title. This multi‑pronged model supports recurring monetization, smoothing cash generation through the typical mobile game lifecycle and lowering single‑title risk.

High historical revenue growth

Very strong reported revenue growth indicates successful user adoption and effective monetization of titles. Sustained top‑line expansion provides the company room to reinvest in new IP, user acquisition and technology, supporting scalable revenue engines and potential operating leverage over the medium term.

Core expertise in mobile game development

A focused business model centered on mobile game development and publishing builds durable capabilities in content creation, live operations and user engagement. This specialization supports repeatable product cycles, faster iteration, and potential competitive moats through IP and development know‑how.

Negative Factors

Rising financial leverage

An increasing debt‑to‑equity trend reduces financial flexibility and raises fixed financing costs. Over a 2–6 month horizon higher leverage can constrain capital allocation for new titles or marketing, elevate refinancing risk, and amplify earnings volatility if growth falters or cash flows weaken.

Negative profitability and shrinking margins

Declining gross margins and a trailing negative net margin signal structural pressure on unit economics. Persistent margin erosion undermines the company’s ability to self‑fund growth and necessitates either cost restructuring, higher monetization per user, or external financing to sustain investment in new titles.

Inconsistent and weakening cash flow

Volatile operating and free cash flows limit capacity to fund ongoing live operations, development cycles and marketing without external funding. Over the medium term this increases reliance on debt or equity, raising dilution or interest burdens and reducing runway for strategic initiatives.

Drecom Co., Ltd. Business Overview & Revenue Model

Company Description

Drecom Co.,Ltd. plans and develops content for smartphones in Japan. It engages in games and media business. The company was founded in 2001 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Drecom generates revenue through multiple streams primarily centered around its mobile gaming operations. The company's main source of income comes from in-app purchases within its games, where players can buy virtual goods, upgrades, and other enhancements to enrich their gaming experience. Additionally, Drecom earns advertising revenue from ad placements within its free-to-play games. The company may also enter partnerships with other firms in the gaming and tech industry, providing development services or collaborating on joint projects, which further contribute to its earnings. By continually updating its game offerings and expanding into new markets, Drecom aims to enhance user engagement and sustain its revenue growth.

Drecom Co., Ltd. Financial Statement Overview

Summary

Drecom Co., Ltd. faces challenges in maintaining consistent revenue growth and profitability. The balance sheet is stable but increasingly leveraged, and cash flow fluctuations highlight potential operational inefficiencies.

Income Statement

The income statement shows a mixed performance with fluctuating revenues and declining profitability. Gross profit margin is decreasing, and TTM net profit margin is negative, indicating challenges in maintaining cost efficiency. The revenue growth rate showed volatility, with recent declines suggesting market or operational difficulties.

Balance Sheet

The balance sheet reflects a stable financial position with a reasonable equity ratio and manageable debt levels. However, the recent increase in debt-to-equity ratio suggests growing financial leverage, which could pose risks if not managed carefully. The company maintains a solid asset base, supporting future growth opportunities.

Cash Flow

Cash flow analysis indicates fluctuations in free cash flow and operating cash flow. The company has experienced inconsistent free cash flow growth, and recent periods show negative trends. The operating cash flow to net income ratio indicates operational challenges in converting income to cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	15.00B	12.66B	9.78B	10.80B	10.53B	11.84B
Gross Profit	4.14B	3.48B	3.40B	4.56B	3.80B	4.00B
EBITDA	-1.82B	-514.67M	236.48M	2.12B	1.75B	2.70B
Net Income	-2.68B	-1.04B	104.05M	1.16B	807.30M	1.62B
Balance Sheet
Total Assets	10.89B	13.51B	14.15B	12.23B	9.65B	9.61B
Cash, Cash Equivalents and Short-Term Investments	3.93B	3.93B	5.94B	6.04B	4.74B	5.29B
Total Debt	4.29B	4.73B	6.47B	3.84B	2.97B	3.19B
Total Liabilities	7.95B	8.79B	8.48B	6.60B	5.08B	5.76B
Stockholders Equity	2.94B	4.72B	5.66B	5.63B	4.57B	3.85B
Cash Flow
Free Cash Flow	0.00	626.38M	-2.48B	639.26M	-171.82M	2.65B
Operating Cash Flow	0.00	634.08M	-473.24M	2.67B	1.60B	3.20B
Investing Cash Flow	0.00	-899.38M	-2.05B	-2.02B	-1.77B	-1.14B
Financing Cash Flow	0.00	-1.74B	2.41B	658.83M	-387.77M	968.89M

Drecom Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 400.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3793, the sentiment is Negative. The current price of 400 is below the 20-day moving average (MA) of 407.00, below the 50-day MA of 427.34, and below the 200-day MA of 493.22, indicating a neutral trend. The MACD of -4.24 indicates Negative momentum. The RSI at 52.13 is Neutral, neither overbought nor oversold. The STOCH value of 88.51 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3793.

Drecom Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3723	82 Outperform	¥16.91B	18.88	―	1.25%	3.50%	6.04%
3928	65 Neutral	¥2.62B	20.75	―	―	-10.80%	-64.63%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
3911	48 Neutral	¥10.70B	5.87	―	―	11.15%	―
3903	46 Neutral	¥19.50B	6.65	―	―	-37.68%	―
3793	42 Neutral	¥12.11B	-5.00	―	―	93.85%	-216.24%
3667	42 Neutral	¥2.71B	-1.84	―	―	-22.21%	32.20%