System D Inc. (3804) AI Stock Analysis

• Market Cap: ¥10.65B
• Dividend Yield: 1.51%
• Average Volume (3M): 1.83K
• Price to Earnings (P/E): 19.9
• Beta (1Y): 0.15
• Revenue Growth: 8.65%
• EPS Growth: 12.86%
• Country: JP
• Employees: 280
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 16.58
• Shares Outstanding: 6,498,000
• 10 Day Avg. Volume: 1,050
• 30 Day Avg. Volume: 1,833
• PEG Ratio: 1.54
• Price to Book (P/B): 2.50
• Price to Sales (P/S): 2.49
• P/FCF Ratio: 11.72
• 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: 65 Neutral
• Price Target: ¥1,690.00 ▼(-11.29% Downside)
• Action: Downgraded Date: 12/19/25
• Date: Action: Downgraded 12/19/25

System D Inc.'s overall stock score reflects its strong financial performance and reasonable valuation, offset by technical indicators suggesting bearish momentum. The absence of recent earnings call insights and corporate events limits additional context.

Positive Factors

Low leverage / strong balance sheet

Material deleveraging and a very low debt-to-equity ratio provide durable financial flexibility. With limited leverage the company can fund strategic investments, weather cyclical downturns without urgent refinancing, and keep interest expense low, supporting long-term stability.

Stable high gross margins

Consistently high gross margins near 43% and robust EBIT/EBITDA margins indicate lasting competitive advantages in pricing or cost structure. Such margin durability supports reinvestment in R&D and product development and maintains profitability across business cycles.

Efficient cash conversion

A near-1 free cash flow to net income ratio and generally robust operating cash flow show strong cash conversion from reported profits. This reliable cash generation underpins sustainable capex, dividend capability, and strategic M&A without heavy external funding.

Negative Factors

Weak recent revenue trend

Negative revenue growth in recent years signals structural demand or competitive challenges that can limit scale economies and long-term growth. Persistent top-line weakness reduces the runway for margin expansion and constrains reinvestment and market-share gains over months to years.

Declining net profit margin

A falling net profit margin despite stable gross margins suggests rising operating costs or nonoperating pressures. Continued margin erosion can depress return on equity and free cash flow over time, forcing trade-offs between investment, dividends, and competitiveness.

Volatile free cash flow growth

Marked volatility in free cash flow growth undermines planning for capital allocation and raises the probability of needing external financing during weaker periods. This variability hampers predictable shareholder returns and makes long-term investment pacing more difficult.

System D Inc. Business Overview & Revenue Model

Company Description

System D Inc. (3804) is a technology company specializing in innovative software solutions and digital services. Focused on the telecommunications and information technology sectors, the company develops a range of products that enhance network efficiency and optimize data management. Its core offerings include cloud-based platforms, cybersecurity solutions, and enterprise resource planning (ERP) systems designed to meet the needs of various industries, from small businesses to large corporations.

How the Company Makes Money

System D Inc. Financial Statement Overview

Summary

System D Inc. demonstrates strong operational efficiency and financial stability, with healthy margins and a solid balance sheet. However, challenges in revenue growth and cash flow volatility could impact future performance.

Income Statement

System D Inc. shows a stable gross profit margin around 43%, indicating consistent cost management. However, the net profit margin has slightly declined from 2023 to 2025, reflecting potential challenges in maintaining profitability. Revenue growth has been negative in recent years, which could be a concern for future expansion. Despite these challenges, EBIT and EBITDA margins remain healthy, suggesting operational efficiency.

Balance Sheet

The company maintains a strong balance sheet with a low debt-to-equity ratio, decreasing from 0.156 in 2022 to 0.038 in 2025, indicating prudent financial management. Return on equity is stable, reflecting effective use of shareholder funds. The equity ratio is solid, suggesting a strong capital structure with a high proportion of equity financing.

Cash Flow

Operating cash flow remains robust, though it has decreased from 2024 to 2025. Free cash flow to net income ratio is nearly 1, indicating efficient cash generation relative to net income. However, free cash flow growth has been volatile, with significant fluctuations over the years, which could pose risks to cash availability for investments.

Breakdown	Oct 2025	Oct 2024	Oct 2023	Oct 2022	Oct 2021
Income Statement
Total Revenue	5.03B	4.63B	4.74B	4.23B	3.84B
Gross Profit	2.18B	2.00B	2.07B	1.95B	1.82B
EBITDA	1.43B	1.34B	1.38B	1.33B	1.20B
Net Income	627.89M	555.95M	632.70M	591.58M	573.60M
Balance Sheet
Total Assets	7.36B	6.96B	6.25B	5.90B	4.70B
Cash, Cash Equivalents and Short-Term Investments	2.50B	2.03B	1.19B	1.23B	1.14B
Total Debt	193.37M	313.36M	433.35M	561.71M	40.26M
Total Liabilities	2.35B	2.46B	2.15B	2.32B	1.60B
Stockholders Equity	5.01B	4.51B	4.09B	3.58B	3.10B
Cash Flow
Free Cash Flow	1.07B	1.10B	348.76M	-318.29M	389.73M
Operating Cash Flow	1.08B	1.50B	900.33M	1.17B	868.04M
Investing Cash Flow	-741.00M	-398.54M	-682.47M	-1.49B	-478.04M
Financing Cash Flow	-261.67M	-266.74M	-255.83M	406.51M	-342.14M

System D Inc. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1905.00
• 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:3804, the sentiment is Neutral. The current price of 1905 is above the 20-day moving average (MA) of 1532.75, above the 50-day MA of 1634.68, and below the 200-day MA of 1925.10, indicating a neutral trend. The MACD of -37.57 indicates Negative momentum. The RSI at 50.71 is Neutral, neither overbought nor oversold. The STOCH value of 48.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:3804.

System D Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4333	81 Outperform	¥21.82B	19.31	―	3.86%	0.50%	17.15%
3771	77 Outperform	¥29.14B	12.67	―	2.93%	11.53%	23.23%
3804	65 Neutral	¥10.65B	19.92	―	1.51%	8.65%	12.86%
3826	64 Neutral	¥5.09B	9.17	―	2.28%	―	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
2321	55 Neutral	¥20.84B	-39.56	―	―	-6.35%	71.66%
7527	47 Neutral	¥4.66B	-18.61	―	―	-40.57%	83.14%