Stock Analysis & Valuation THE WHY HOW DO COMPANY, Inc. (3823.T)

• Previous Close: ¥53.00
• Sector Valuation Confidence Level: Low

Valuation method	Value, ¥	Upside, %
Artificial intelligence (AI)	50.37	-5
Intrinsic value (DCF)	58619.58	110503
Graham-Dodd Method		n/a
Graham Formula	203.65	284

Strategic Investment Analysis

Company Overview

THE WHY HOW DO COMPANY, Inc. (formerly Acrodea, Inc.) is a Tokyo-based technology firm specializing in smartphone and IoT solutions, gaming, and diversified business ventures. Operating in Japan, the company provides IoT services like iBall technical shot and IoT intercom systems, alongside mobile gaming titles such as Boku-J and Soccer Japan National Team Heroes. Its Kiskae Touch service enables Android theme customization, while its demo device management system supports mobile operator retail outlets. The company also engages in real estate, hospitality, and IT education through its Interplan IT school. Despite its diversified portfolio, THE WHY HOW DO COMPANY faces financial challenges, reflected in recent net losses. Its pivot from software development to a broader service-oriented model underlines its adaptive strategy in Japan's competitive tech landscape.

Investment Summary

THE WHY HOW DO COMPANY presents a high-risk investment due to its recent financial struggles, including a net loss of ¥961.6 million and negative operating cash flow. However, its diversified business model—spanning IoT, gaming, and real estate—offers potential for recovery if operational efficiencies improve. The company’s low beta (0.819) suggests relative stability compared to the broader market, but its lack of dividends and negative EPS (-¥17.6) may deter conservative investors. Investors should monitor its ability to monetize its IoT and gaming segments, as well as cost-management initiatives, before considering a position.

Competitive Analysis

THE WHY HOW DO COMPANY operates in Japan’s fragmented tech sector, competing with larger software and gaming firms. Its IoT and mobile gaming offerings face stiff competition from established players like GungHo Online and Colopl, which dominate Japan’s mobile gaming market. The company’s niche in smartphone customization (Kiskae Touch) and IoT intercom systems provides differentiation, but scalability remains a challenge. Its real estate and hospitality ventures diverge from core tech operations, potentially diluting focus. Financially, the company lags behind peers with negative profitability and strained cash flow, limiting R&D investment. However, its rebranding and diversified approach could unlock synergies if managed effectively. Competitors with stronger balance sheets pose a significant threat, but THE WHY HOW DO COMPANY’s localized expertise in Japan’s regulatory environment (e.g., Guam-approved bingo system) offers a narrow advantage.

Major Competitors

• GungHo Online Entertainment (3765.T): GungHo dominates Japan’s mobile gaming sector with hits like Puzzle & Dragons. Its strong revenue streams and IP portfolio outclass THE WHY HOW DO COMPANY’s gaming division. However, GungHo’s reliance on a few flagship titles poses concentration risks.
• Colopl, Inc. (3668.T): Colopl is a major mobile game developer with a global footprint, contrasting with THE WHY HOW DO COMPANY’s domestic focus. Its robust R&D budget and hit titles like Shironeko Project give it an edge, but international expansion risks exposure to volatile markets.
• Dentsu Soken Inc. (4812.T): Dentsu Soken excels in IT solutions and consulting, overlapping with THE WHY HOW DO COMPANY’s IoT services. Its larger scale and corporate client base provide stability, but it lacks the latter’s niche in consumer-facing smartphone customization.
• KLab Inc. (3656.T): KLab specializes in mobile games and live ops, competing directly with THE WHY HOW DO COMPANY’s gaming segment. Its Bleach: Brave Souls title showcases IP leverage, but its smaller market cap reflects narrower diversification.