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

• Market Cap: ¥11.62B
• Dividend Yield: N/A
• Average Volume (3M): 106.72K
• Price to Earnings (P/E): 4.7
• Beta (1Y): 0.74
• Revenue Growth: 93.85%
• EPS Growth: -216.24%
• Country: JP
• Employees: 369
• Sector: Communication Services
• Sector Strength: 97
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 21.67
• 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): -60.7
• Revenue Forecast (FY): ¥17.50B

• Rating: 42 Neutral
• Price Target: ¥384.00 ▼(-4.00% Downside)
• Action: Reiterated Date: 07/31/25
• Date: Action: Reiterated 07/31/25

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

Recurring revenue from live-service games

Drecom's primary model—development and operation of mobile/online live-service games with in-game monetization—creates recurring revenue potential. Structurally, live-ops can produce predictable inflows over months, supporting sustained cash generation if engagement and retention are maintained.

Platform and technology capabilities

The company's investment in platform and tech enables reuse across titles, faster product iteration, and potential expansion into related digital services. Durable platform assets reduce marginal costs per title, support scaling, and open licensing or service revenue opportunities beyond single-game dependency.

Solid asset base and manageable debt levels

A solid asset base and a reasonable equity ratio provide a buffer to fund development and absorb shocks. Manageable debt levels, at current metrics, support medium-term investment capacity and give the company financial flexibility to execute product roadmaps and strategic initiatives.

Negative Factors

Rising financial leverage

The documented uptick in debt-to-equity signals increasing leverage. Higher leverage reduces financial flexibility, raises interest burdens, and increases solvency risk if revenue or margins deteriorate, making it harder to fund new titles or sustain marketing without external financing.

Inconsistent cash flow conversion

Operating cash flow has been volatile and free cash flow inconsistent, indicating challenges converting reported income into cash. Persistent cash conversion issues weaken the firm's ability to self-fund game development and live-ops, increasing reliance on external funding and raising long-term risk.

Declining profitability and margin pressure

Decreasing gross margins and a negative trailing net margin point to structural profitability weakness. Margin erosion constrains reinvestment in IP and product updates, lengthens the path to sustained profitability, and increases dependence on hit titles to restore long-term earnings power.

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 primarily generates revenue through the development and operation of mobile/online games and digital content services. Its earnings are typically driven by (1) in-game monetization (e.g., purchases of virtual items and other pay-to-play features) and (2) revenues associated with operating and maintaining live-service game titles over time. The company may also earn income from (3) licensing and collaboration arrangements related to game/content IP and (4) service or advertising-related revenues tied to any media/internet services it operates; however, the presence, scale, and structure of these streams for Drecom are null without specific disclosed breakdowns. Any significant partnerships, platform dependencies (e.g., app stores), or publisher/developer relationships that materially affect revenue are null.

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	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
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	1.01B	638.46M	1.05B	2.55B	2.13B	2.71B
Net Income	-2.68B	-1.04B	104.05M	1.16B	807.30M	1.62B
Balance Sheet
Total Assets	10.89B	13.53B	14.17B	12.25B	9.68B	9.62B
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	3.01B	3.20B
Total Liabilities	7.95B	8.81B	8.51B	6.62B	5.11B	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	-475.64M	2.64B	1.53B	3.18B
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: Neutral

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 402.40, below the 50-day MA of 411.16, and below the 200-day MA of 462.76, indicating a bearish trend. The MACD of -1.21 indicates Negative momentum. The RSI at 47.47 is Neutral, neither overbought nor oversold. The STOCH value of 62.86 is Neutral, 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
3911	62 Neutral	¥9.57B	9.63	―	―	11.15%	―
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
3932	60 Neutral	¥43.63B	9.53	―	4.06%	-15.30%	39.61%
3656	52 Neutral	¥29.86B	-95.92	―	―	-14.71%	-38.87%
4175	48 Neutral	¥10.91B	137.85	―	―	16.70%	87.76%
3903	46 Neutral	¥17.21B	9.33	―	―	-37.68%	―
3793	42 Neutral	¥11.62B	4.66	―	―	93.85%	-216.24%