FreeBit Co., Ltd. (3843) AI Stock Analysis

• Market Cap: ¥31.68B
• Dividend Yield: 1.9%
• Average Volume (3M): 37.50K
• Price to Earnings (P/E): 10.8
• Beta (1Y): 0.98
• Revenue Growth: 12.67%
• EPS Growth: -9.32%
• Country: JP
• Employees: 884
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): 55.38
• Shares Outstanding: 23,414,000
• 10 Day Avg. Volume: 55,480
• 30 Day Avg. Volume: 37,500
• PEG Ratio: -0.48
• Price to Book (P/B): 4.72
• Price to Sales (P/S): 0.56
• P/FCF Ratio: 7.66
• 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: 66 Neutral
• Price Target: ¥1,891.00 ▲(17.75% Upside)

FreeBit Co., Ltd. shows strong financial performance with robust revenue growth and cash flow generation. However, the stock faces challenges with declining profit margins and increased leverage. Technical indicators suggest bearish momentum, while the valuation appears reasonable. The absence of earnings call and corporate events data limits further insights.

Positive Factors

Free cash flow generation

Very strong free cash flow growth indicates durable cash generation from operations. Over the next 2-6 months this supports reinvestment in data center and cloud capacity, funds debt service or share returns, and gives management flexibility to pursue strategic opportunities without external financing.

Recurring subscription revenue

A subscription-driven model for cloud and data center services provides predictable, recurring revenue that improves cash flow visibility and customer stickiness. This durable revenue base aids forecasting, supports long-term capacity planning, and enables cross-selling of IoT and blockchain services.

High return on equity

A 42% ROE signals efficient use of shareholder capital and strong profit generation relative to equity. Sustainably high ROE, if maintained, supports internal funding for growth initiatives and signals management’s ability to produce attractive economic returns versus peers over multi-quarter horizons.

Negative Factors

Elevated leverage

A debt-to-equity ratio above 3x materially raises financial risk and constrains flexibility. Over several months higher leverage amplifies interest and refinancing exposure, limits capacity for opportunistic investments or M&A, and makes cash flow volatility more consequential for solvency.

Declining net profit margin

A falling net margin from 6.72% to 4.99% indicates rising costs or pricing pressure that erodes retained earnings. Persisting margin decline reduces the company’s ability to self-fund growth, weakens resilience to cyclical downturns, and compresses long-term free cash flow available for strategic uses.

Operating margin compression

Declining EBIT and EBITDA margins point to reduced operational efficiency or higher recurring costs in core telecom and cloud operations. Structurally weaker operating profitability limits reinvestment, pressures competitive positioning in capital-intensive data center operations, and heightens sensitivity to demand shifts.

FreeBit Co., Ltd. Business Overview & Revenue Model

Company Description

FreeBit Co., Ltd. (3843) is a Japanese technology company specializing in internet infrastructure solutions and telecommunications services. The company operates primarily in the IT and telecommunications sectors, offering a variety of services including cloud computing, data center operations, and managed services. FreeBit is also involved in the development and provision of blockchain technology and IoT solutions, targeting both individual consumers and businesses to enhance their digital capabilities.

How the Company Makes Money

FreeBit Co., Ltd. generates revenue through multiple streams, primarily focusing on subscription fees for its cloud services and data center operations. The company charges clients for managed services, including server hosting and maintenance, which provide a steady income. Additionally, FreeBit earns revenue from its partnerships with other technology firms and telecommunications providers, where it offers white-label solutions and infrastructure support. The growing demand for IoT and blockchain services has also contributed to its revenue, as these sectors are increasingly integrated into its service offerings, enabling the company to tap into new markets and customer bases.

FreeBit Co., Ltd. Financial Statement Overview

Summary

FreeBit Co., Ltd. exhibits strong revenue growth and cash flow generation, but faces challenges with declining profit margins and increased leverage. The company should focus on improving operational efficiency and managing debt levels to maintain financial stability.

Income Statement

FreeBit Co., Ltd. has shown consistent revenue growth, with a 2.76% increase in the latest year. The gross profit margin remains stable around 28.5%, indicating efficient cost management. However, the net profit margin has decreased to 4.99% from 6.72% the previous year, suggesting increased expenses or other financial pressures. EBIT and EBITDA margins have also declined, reflecting potential challenges in operational efficiency.

Balance Sheet

The company's debt-to-equity ratio has increased significantly to 3.35, indicating higher leverage and potential financial risk. Return on equity is strong at 42.28%, showcasing effective use of equity to generate profits. However, the equity ratio has decreased, suggesting a reliance on debt financing.

Cash Flow

FreeBit Co., Ltd. has demonstrated impressive free cash flow growth of 115.41%, indicating strong cash generation capabilities. The operating cash flow to net income ratio is 0.29, showing a solid conversion of income to cash. The free cash flow to net income ratio is high at 0.88, reflecting efficient cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	56.96B	55.07B	53.04B	46.77B	43.08B	52.01B
Gross Profit	15.94B	15.71B	15.39B	13.33B	12.41B	15.45B
EBITDA	6.19B	5.89B	6.74B	4.48B	3.84B	5.55B
Net Income	3.00B	2.75B	3.57B	1.79B	827.85M	1.59B
Balance Sheet
Total Assets	38.28B	40.56B	38.18B	35.93B	35.05B	34.84B
Cash, Cash Equivalents and Short-Term Investments	18.84B	20.68B	18.72B	18.31B	17.74B	17.62B
Total Debt	20.18B	21.75B	14.14B	15.99B	15.14B	14.32B
Total Liabilities	29.27B	32.02B	22.99B	24.89B	24.01B	22.69B
Stockholders Equity	6.94B	6.50B	11.76B	8.32B	6.93B	8.71B
Cash Flow
Free Cash Flow	929.82M	4.01B	2.81B	2.65B	2.07B	6.18B
Operating Cash Flow	1.01B	4.57B	4.23B	3.32B	2.33B	7.12B
Investing Cash Flow	-336.58M	-687.49M	-1.09B	-644.62M	510.69M	-2.66B
Financing Cash Flow	-1.70B	-1.92B	-2.72B	-2.11B	-2.73B	-2.57B

FreeBit Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1606.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3843, the sentiment is Neutral. The current price of 1606 is below the 20-day moving average (MA) of 1691.35, below the 50-day MA of 1645.70, and above the 200-day MA of 1560.39, indicating a neutral trend. The MACD of 1.88 indicates Positive momentum. The RSI at 45.10 is Neutral, neither overbought nor oversold. The STOCH value of 16.32 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:3843.

FreeBit Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3662	70 Outperform	¥19.94B	17.27	―	1.85%	0.63%	-1.84%
3843	66 Neutral	¥31.68B	10.84	―	1.90%	12.67%	-9.32%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
3845	52 Neutral	¥5.40B	-44.01	―	―	-32.32%	-69.96%