Stock Analysis & Valuation YRGLM Inc. (3690.T)

• Previous Close: ¥581.00
• Sector Valuation Confidence Level: High

Valuation method	Value, ¥	Upside, %
Artificial intelligence (AI)	876.92	51
Intrinsic value (DCF)	9636.33	1559
Graham-Dodd Method	183.16	-68
Graham Formula	92.74	-84

Strategic Investment Analysis

Company Overview

YRGLM Inc. (3690.T) is a Japan-based marketing and advertising technology company specializing in digital marketing solutions. Headquartered in Osaka, the company operates through multiple platforms, including AD EBiS for advertising effectiveness measurement, Adrepo for automated programmatic ad reporting, Adhoop for marketing-specific matching, and eZCX for customer experience management. Additionally, YRGLM owns Spoo! Inc., a creative agency, and TOPICA WORKS, a distributed video media management service. Formerly known as LOCKON Co., LTD., the company rebranded to YRGLM in 2019, reflecting its evolution into a diversified digital marketing and e-commerce solutions provider. With a market cap of ¥3.24 billion, YRGLM serves businesses seeking data-driven advertising and customer engagement tools in Japan's competitive digital marketing landscape. The company’s offerings, such as EC-CUBE, a commercial distribution platform, position it as a key player in Japan’s advertising and e-commerce ecosystem.

Investment Summary

YRGLM Inc. presents a niche investment opportunity in Japan’s digital marketing sector, with a diversified portfolio of advertising and customer experience platforms. The company’s modest market cap (¥3.24B) and low beta (0.707) suggest lower volatility relative to the broader market. However, its financials reveal challenges, including thin net income margins (¥68.8M on ¥3.64B revenue) and diluted EPS of ¥11.14. Positive operating cash flow (¥386M) and a strong cash position (¥1.41B) provide liquidity, but high total debt (¥844M) raises leverage concerns. The dividend yield (¥7.6/share) may appeal to income-focused investors, but growth prospects depend on scaling its digital ad-tech solutions in a competitive industry dominated by larger players.

Competitive Analysis

YRGLM Inc. operates in Japan’s highly competitive digital marketing and advertising sector, competing against global ad-tech firms and domestic agencies. Its competitive advantage lies in specialized platforms like AD EBiS and Adrepo, which cater to programmatic advertising analytics—a growing segment in Japan’s digital ad market. However, YRGLM’s small scale limits its ability to compete with multinational giants in terms of R&D and global reach. The company’s focus on Japan provides regional expertise but exposes it to domestic economic fluctuations. Its ownership of Spoo! Inc. and TOPICA WORKS adds creative and video media capabilities, differentiating it from pure-play ad-tech firms. Yet, YRGLM’s financials indicate margin pressures, likely due to high customer acquisition costs and competition from cheaper SaaS alternatives. To sustain growth, YRGLM must enhance its AI-driven analytics, expand partnerships, and potentially explore Southeast Asian markets where Japanese digital services are in demand.

Major Competitors

• Rakuten Group, Inc. (4755.T): Rakuten dominates Japan’s digital ecosystem with its advertising, e-commerce, and fintech services. Its scale and integrated platform (Rakuten Marketing) pose a significant threat to YRGLM’s niche offerings. However, Rakuten’s broader focus may leave gaps in specialized ad-tech tools where YRGLM competes.
• DeNA Co., Ltd. (2432.T): DeNA provides mobile advertising and gaming platforms, overlapping with YRGLM’s digital marketing services. Its strength in mobile ads and AI-driven targeting challenges YRGLM, but DeNA’s reliance on gaming revenue creates volatility, whereas YRGLM has a more diversified client base.
• Otsuka Corporation (4768.T): Otsuka offers IT and digital marketing solutions, competing in CXM and ad-tech. Its stronger financials (higher revenue and net income) and enterprise clientele give it an edge over YRGLM, though YRGLM’s specialized tools like Adrepo may appeal to SMEs seeking cost-effective solutions.
• Square Enix Holdings Co., Ltd. (9684.T): Square Enix’s ad-tech arm competes in gaming and entertainment marketing. While not a direct competitor, its creative and interactive ad capabilities overlap with YRGLM’s Spoo! Inc. agency. YRGLM’s broader B2B focus differentiates it from Square Enix’s entertainment-centric model.
• CyberAgent, Inc. (4751.T): CyberAgent’s AD Tech segment (Ameba) is a major player in programmatic ads and influencer marketing. Its vast resources and data analytics prowess overshadow YRGLM’s capabilities, but YRGLM’s SME-friendly pricing and regionalized services offer a niche alternative.