Stock Analysis & Valuation Cross Marketing Group Inc. (3675.T)

• Previous Close: ¥658.00
• Sector Valuation Confidence Level: High

Valuation method	Value, ¥	Upside, %
Artificial intelligence (AI)	626.66	-5
Intrinsic value (DCF)	441.55	-33
Graham-Dodd Method	358.03	-46
Graham Formula	453.64	-31

Strategic Investment Analysis

Company Overview

Cross Marketing Group Inc. (3675.T) is a Tokyo-based company specializing in market research and IT solutions, serving clients in Japan and internationally. Founded in 2013, the company operates through subsidiaries offering a diverse range of services, including shopper behavior analysis, healthcare marketing research, web and software development, and data processing. Cross Marketing Group also provides UI/UX consulting, mobile web development, and public relations solutions, positioning itself as a versatile player in the digital marketing and IT services sector. With a strong focus on innovation, the company develops and operates mobile and smartphone applications, catering to the growing demand for digital transformation. As part of the Communication Services sector and Internet Content & Information industry, Cross Marketing Group leverages its expertise to help businesses optimize their digital presence and marketing strategies. The company’s integrated approach to market research and IT solutions makes it a key player in Japan’s evolving digital economy.

Investment Summary

Cross Marketing Group Inc. presents a mixed investment profile. On the positive side, the company reported solid revenue of ¥25.09 billion and net income of ¥1.01 billion for FY 2023, with diluted EPS of ¥50.57. Its operating cash flow of ¥1.80 billion and cash reserves of ¥6.48 billion provide financial stability. However, the company carries a moderate debt load of ¥4.10 billion, and its beta of 1.288 suggests higher volatility compared to the broader market. The dividend yield, with a payout of ¥14 per share, may appeal to income-focused investors. Given its niche in market research and IT solutions, Cross Marketing Group benefits from Japan’s digital transformation trends, but competition and economic sensitivity in the marketing sector pose risks. Investors should weigh its growth potential against sector-specific challenges.

Competitive Analysis

Cross Marketing Group Inc. operates in a competitive landscape dominated by both specialized market research firms and broader IT service providers. Its competitive advantage lies in its integrated approach, combining market research with IT solutions—a synergy that allows it to offer end-to-end digital marketing services. The company’s focus on shopper behavior analysis and healthcare marketing research provides niche expertise, differentiating it from generalist competitors. However, its relatively small market cap (¥12.93 billion) limits its scale compared to larger global players. Cross Marketing’s domestic presence in Japan is a strength, but international expansion remains limited. The company’s ability to innovate in mobile and web development is critical, as competitors with stronger R&D budgets could outpace it. Additionally, reliance on Japan’s economy makes it vulnerable to local market fluctuations. While its diversified service portfolio mitigates some risks, Cross Marketing must continuously invest in technology and talent to maintain its competitive edge in a rapidly evolving digital services industry.

Major Competitors

• Rakuten Insight Inc. (4755.T): Rakuten Insight, a subsidiary of Rakuten Group, is a major competitor in Japan’s market research space. It benefits from Rakuten’s vast e-commerce ecosystem, providing robust consumer data insights. However, its focus is narrower than Cross Marketing’s, lacking the latter’s IT solutions integration. Rakuten Insight’s strong brand recognition gives it an edge in attracting large clients.
• Nomura Research Institute Ltd. (4307.T): Nomura Research Institute (NRI) is a dominant IT consulting and research firm with a broader service portfolio, including financial and public sector solutions. Its scale and established reputation overshadow Cross Marketing, but NRI’s higher cost structure may make Cross Marketing more agile for mid-sized businesses seeking specialized digital marketing services.
• SCSK Corporation (9719.T): SCSK provides IT services and systems integration, competing with Cross Marketing’s tech solutions. Its strength lies in enterprise IT infrastructure, whereas Cross Marketing focuses more on digital marketing applications. SCSK’s larger client base in corporate sectors gives it stability, but it lacks Cross Marketing’s niche in behavioral analytics.
• Internet Initiative Japan Inc. (3774.T): IIJ offers internet infrastructure and cloud services, overlapping with Cross Marketing’s web development segment. IIJ’s stronger technological backbone and enterprise focus make it a formidable competitor, though Cross Marketing’s dual expertise in marketing research provides differentiation in client targeting and campaign optimization services.