Stock Analysis & Valuation And Factory, Inc. (7035.T)

• Previous Close: ¥216.00
• Sector Valuation Confidence Level: Low

Valuation method	Value, ¥	Upside, %
Artificial intelligence (AI)	3298.70	1427
Intrinsic value (DCF)	2417.62	1019
Graham-Dodd Method	146.90	-32
Graham Formula	582.43	170

Strategic Investment Analysis

Company Overview

and factory,inc. is a Tokyo-based technology company specializing in smartphone applications and IoT services. Founded in 2014, the company develops and markets tool-based apps, game strategy bulletin board applications, and manga apps, catering to a diverse user base. Additionally, and factory,inc. provides IoT solutions tailored for accommodation facilities, enhancing operational efficiency and guest experiences. Operating in the competitive Software - Application sector, the company leverages Japan's tech-savvy market to drive innovation and user engagement. With a market capitalization of approximately ¥2.64 billion, and factory,inc. focuses on scalable digital solutions, positioning itself as a niche player in Japan's growing app economy. Its diversified portfolio and IoT integration highlight its adaptability in the rapidly evolving tech landscape.

Investment Summary

and factory,inc. presents a mixed investment profile. The company's revenue of ¥5.02 billion and positive net income of ¥88.94 million in FY 2024 indicate operational viability, supported by strong operating cash flow of ¥1.83 billion. However, its low beta (0.271) suggests limited volatility but also muted responsiveness to market movements. The absence of dividends may deter income-focused investors, while its modest EPS (¥7.9) reflects moderate profitability. The company's cash reserves (¥1.56 billion) and manageable debt (¥455.92 million) provide financial stability, but growth depends on its ability to scale its app and IoT offerings in a saturated market. Investors should weigh its niche positioning against competitive pressures in Japan's tech sector.

Competitive Analysis

and factory,inc. operates in a highly competitive segment of the Software - Application industry, where differentiation is critical. Its focus on tool-based and manga apps allows it to carve out a niche, but it faces stiff competition from larger global and domestic players with broader portfolios. The company's IoT services for accommodation facilities offer a growth avenue, yet this space is increasingly crowded with specialized providers. and factory,inc.'s competitive advantage lies in its localized expertise and agile development capabilities, enabling rapid iteration tailored to Japanese user preferences. However, its limited scale compared to industry giants restricts its R&D and marketing reach. The company's financial health—positive cash flow and low leverage—provides a foundation for strategic investments, but sustaining growth requires innovation and potential expansion into adjacent markets. Its ability to monetize niche applications and IoT solutions will determine its long-term positioning.

Major Competitors

• Rakuten Group, Inc. (4755.T): Rakuten dominates Japan's digital ecosystem with a vast app portfolio, including e-commerce, fintech, and content platforms. Its scale and integrated services pose a significant challenge to niche players like and factory,inc. However, Rakuten's broad focus may limit deep specialization in tool-based or manga apps, where and factory,inc. could excel.
• Nexon Co., Ltd. (3659.T): Nexon is a leader in online and mobile gaming, with resources far exceeding and factory,inc.'s. Its strength in game-related content could overshadow and factory,inc.'s strategy bulletin board apps. However, Nexon's lack of focus on utility apps and IoT leaves room for and factory,inc. to differentiate.
• mixi, Inc. (2121.T): mixi operates popular social networking and gaming apps in Japan, competing directly with and factory,inc.'s community-driven offerings. Its flagship app, Monster Strike, demonstrates strong monetization capabilities. While mixi has broader reach, and factory,inc.'s IoT segment provides a unique counterbalance.
• Nippon Telegraph and Telephone Corporation (9432.T): NTT's extensive IoT infrastructure and enterprise solutions overshadow and factory,inc.'s accommodation-focused services. However, NTT's size may limit agility in niche markets, where and factory,inc. can leverage targeted innovation.