Ryoyu Systems Co., Ltd. (4685) AI Stock Analysis

• Market Cap: ¥46.86B
• Dividend Yield: 2.7%
• Average Volume (3M): 64.86K
• Price to Earnings (P/E): 12.1
• Beta (1Y): 1.07
• Revenue Growth: 17.96%
• EPS Growth: 30.46%
• Country: JP
• Employees: 2,012
• Sector: Industrials
• Sector Strength: 72
• Industry: Conglomerates
• EPS (TTM): 87.41
• Shares Outstanding: 12,779,712
• 10 Day Avg. Volume: 95,700
• 30 Day Avg. Volume: 64,863
• PEG Ratio: 0.34
• Price to Book (P/B): 2.41
• Price to Sales (P/S): 1.08
• P/FCF Ratio: 16.16
• 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: ¥3,964.00 ▲(16.76% Upside)
• Action: Downgraded Date: 11/21/25
• Date: Action: Downgraded 11/21/25

Ryoyu Systems Co., Ltd. scores a 66, driven primarily by its strong financial performance and attractive valuation. However, the current bearish technical indicators suggest caution in the short term. The absence of recent earnings call data and corporate events limits the analysis to these factors.

Positive Factors

Consistent revenue growth

Revenue growth of ~15% year-over-year indicates durable demand for Ryoyu's systems-integration and maintenance services. Consistent top-line expansion supports scale economies, backlog conversion and reinvestment in offerings, strengthening long-term competitive position and recurring revenue streams.

Solid balance sheet / low leverage

A high equity ratio (63.4%) and low leverage provide financial flexibility and downside protection. ROE of 17.7% shows effective capital deployment. This balance-sheet strength supports investment, selective M&A, and resilience to cyclical IT spending without immediate liquidity strain.

Improved free cash flow

A strong FCF-to-net-income ratio (0.85) signals healthy cash conversion and sustainable cash generation. Reliable free cash flow enables steady dividends, debt paydown, and funding for product development or selective investments, enhancing long-term strategic optionality and stability.

Negative Factors

Operating cash flow variability

A dip in operating cash flow relative to net income suggests timing or working-capital pressure. Persistent variability would make cash generation less predictable, constraining reinvestment, dividend sustainability, and ability to absorb shocks even if headline profitability remains positive.

Limited EBITDA margin improvement

Modest EBITDA margin improvement despite revenue growth points to limited operational leverage or rising operating costs. Without further efficiency gains or pricing power, margin expansion may stall, pressuring long-term profitability and reducing capacity to invest while maintaining returns.

Rising liabilities to monitor

A small uptick in total liabilities, though not acute today, could erode the company's low-leverage profile if it continues. Rising liabilities raise refinancing and interest-rate exposure and could limit financial flexibility for growth or capital return during weaker demand periods.

Ryoyu Systems Co., Ltd. Business Overview & Revenue Model

Company Description

Ryoyu Systems Co., Ltd. provides information technology (IT) solutions for various industries in Japan. The company offers system development services for production management systems; system maintenance/operation/monitoring services, including design of information systems and communication network; and IT infrastructure construction services comprising planning, design, construction, and operation of IT platforms, such as computers, peripherals, network devices, and communication cables. It also provides analysis solutions, including aerodynamic/structural analysis of aircraft, rockets, and engines and mechanical devices, as well as collision/impact analysis of automobiles; CAD design services; product lifecycle management system that integrates and manages various data, processes, and resources; information security operation services; and digital businesses support services. The company was founded in 1968 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Ryoyu Systems generates revenue through multiple streams primarily centered around software sales and systems integration services. Their core revenue model includes licensing fees from software products, service fees for system integration projects, and ongoing maintenance and support contracts. Additionally, the company may earn revenue from consulting services that help clients optimize their IT infrastructure and processes. Significant partnerships with key players in the manufacturing industry and technology providers also contribute to their earnings by enabling collaborative projects that expand their market reach and enhance their service offerings.

Ryoyu Systems Co., Ltd. Financial Statement Overview

Summary

Ryoyu Systems Co., Ltd. demonstrates strong financial performance with consistent revenue and profit growth, a solid balance sheet with low leverage, and improving cash flows. The company is on a positive trajectory with increasing profitability and effective capital management, although there is room for further operational efficiency improvements.

Income Statement

Ryoyu Systems Co., Ltd. demonstrated strong revenue growth of 15.4% from 2024 to 2025, alongside a consistent increase in gross profit margins from 21.1% to 21.6%. The EBIT margin improved as well, indicating efficient cost management. Net profit margin rose to 7.9%, reflecting enhanced profitability. However, EBITDA margins showed only slight improvement, suggesting room for operational efficiency gains.

Balance Sheet

The company maintains a solid balance sheet with a low debt-to-equity ratio, indicating low leverage risks. The equity ratio is robust at 63.4%, reflecting strong asset management. Return on equity increased to 17.7%, showcasing effective use of shareholder funds. However, the slight increase in total liabilities warrants monitoring.

Cash Flow

Free cash flow improved significantly in 2025, with a strong free cash flow to net income ratio of 0.85, indicating healthy cash generation relative to net income. The operating cash flow to net income ratio experienced a dip but remains positive. The positive trend in free cash flow growth rate over the past year enhances financial stability.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	44.49B	42.76B	37.06B	33.14B	30.26B	31.56B
Gross Profit	9.59B	9.23B	7.83B	6.56B	5.95B	5.57B
EBITDA	5.43B	5.20B	3.79B	2.88B	2.65B	2.40B
Net Income	3.56B	3.38B	2.42B	1.83B	1.58B	1.42B
Balance Sheet
Total Assets	26.70B	30.20B	26.83B	23.02B	21.93B	20.05B
Cash, Cash Equivalents and Short-Term Investments	2.04B	10.21B	10.31B	2.63B	1.90B	2.07B
Total Debt	10.00M	14.00M	22.00M	30.00M	41.00M	5.00M
Total Liabilities	6.06B	9.50B	8.67B	7.19B	7.55B	7.01B
Stockholders Equity	19.13B	19.17B	16.75B	14.57B	13.22B	11.97B
Cash Flow
Free Cash Flow	0.00	2.86B	3.42B	-771.00M	2.30B	717.00M
Operating Cash Flow	0.00	3.02B	4.09B	-430.00M	2.45B	806.00M
Investing Cash Flow	0.00	-2.10B	-2.76B	1.25B	-2.32B	-1.22B
Financing Cash Flow	0.00	-939.00M	-899.00M	-526.00M	-420.00M	-381.00M

Ryoyu Systems Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3395.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4685, the sentiment is Positive. The current price of 3395 is below the 20-day moving average (MA) of 3576.75, below the 50-day MA of 3617.30, and below the 200-day MA of 3529.50, indicating a bullish trend. The MACD of -13.20 indicates Negative momentum. The RSI at 53.97 is Neutral, neither overbought nor oversold. The STOCH value of 69.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4685.

Ryoyu Systems Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
7509	77 Outperform	¥7.35B	5.20	―	3.35%	7.25%	-11.62%
8157	75 Outperform	¥68.72B	11.93	―	2.82%	-5.63%	52.73%
8057	68 Neutral	¥110.59B	9.68	―	2.91%	31.48%	83.15%
9248	67 Neutral	¥15.02B	5.69	―	3.88%	15.50%	―
4685	66 Neutral	¥46.86B	12.09	―	2.70%	17.96%	30.46%
9435	66 Neutral	¥1.90T	15.23	―	1.59%	14.45%	29.21%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%