Stock Analysis & Valuation INCLUSIVE Inc. (7078.T)

• Previous Close: ¥398.00
• Sector Valuation Confidence Level: High

Valuation method	Value, ¥	Upside, %
Artificial intelligence (AI)	552.69	39
Intrinsic value (DCF)	270.23	-32
Graham-Dodd Method		n/a
Graham Formula	10.28	-97

Strategic Investment Analysis

Company Overview

INCLUSIVE Inc. (7078.T) is a Tokyo-based digital media and advertising services company specializing in web media monetization, ad tech solutions, and strategic consulting. Operating in Japan's competitive advertising sector, the company provides end-to-end services including media planning, branding strategies, and promotional campaigns. With a diversified portfolio that also includes food-related services, INCLUSIVE leverages its expertise in digital marketing to help businesses optimize their online presence. Founded in 2007, the company has established itself as a niche player in Japan's advertising agency landscape, catering to clients seeking localized, data-driven marketing solutions. As part of the Communication Services sector, INCLUSIVE benefits from Japan's growing digital ad spend, projected to expand steadily amid increasing e-commerce and mobile internet penetration. The company's hybrid model—combining media operations, consulting, and ad tech—positions it uniquely in a market dominated by larger global agencies.

Investment Summary

INCLUSIVE Inc. presents a mixed investment profile. On the positive side, the company operates in Japan's resilient digital advertising market, which continues to grow despite macroeconomic headwinds. Its modest market cap (~¥4.99B) and low beta (0.847) suggest lower volatility relative to the broader market. However, thin operating cash flow (¥88.3M) and negligible dividends may deter income-focused investors. The firm’s net income (¥313.6M) and diluted EPS (¥30.94) reflect profitability, but reliance on Japan’s domestic market—coupled with debt (¥780.4M) exceeding operating cash flow—raises liquidity concerns. Investors should weigh its niche expertise against limited scalability compared to global peers.

Competitive Analysis

INCLUSIVE Inc. competes in Japan’s fragmented advertising sector by focusing on mid-market clients and localized ad tech solutions. Its primary competitive advantage lies in its dual role as both a media operator and a consultant, allowing for integrated campaign execution—a differentiation from pure-play agencies. However, the company lacks the scale of global networks like Dentsu, limiting its ability to compete for multinational accounts. Its ¥5.36B revenue is dwarfed by industry leaders, though specialization in web media monetization helps retain SME clients. The ad tech segment faces pressure from global platforms (e.g., Google Ads), but INCLUSIVE’s Japan-specific data insights provide regional defensibility. Financial metrics reveal constraints: cash reserves (¥2.21B) offer a buffer, but low capex (¥-34M) suggests limited R&D investment in emerging ad formats (e.g., AI-driven targeting). Competitively, the firm must balance its consultative approach with the need to automate services to improve margins.

Major Competitors

• Dentsu Group Inc. (4324.T): Dentsu (4324.T) dominates Japan’s advertising market with global reach and multidisciplinary services. Its strengths include vast client networks and proprietary tech like Merkle for data-driven marketing. However, its complexity and high overheads make it less agile than INCLUSIVE for localized campaigns. Dentsu’s scale (¥1.2T market cap) overshadows INCLUSIVE’s niche operations.
• Hakuhodo DY Holdings (2433.T): Hakuhodo DY (2433.T) is Japan’s second-largest ad agency, excelling in traditional media and creative services. Its strength lies in deep client relationships, but slower digital transformation compared to INCLUSIVE’s web-first model. Hakuhodo’s international partnerships (e.g., with Publicis) contrast with INCLUSIVE’s domestic focus.
• Rakuten Group, Inc. (4755.T): Rakuten (4755.T) competes indirectly via its ad tech ecosystem (e.g., Rakuten Advertising). Its strengths include first-party e-commerce data and cross-platform reach, but its broad focus dilutes specialization in media consulting—a core offering for INCLUSIVE.
• CyberAgent, Inc. (4776.T): CyberAgent (4776.T) overlaps with INCLUSIVE in digital media (e.g., Ameba blogs) and performance ads. Its strength is owned media assets, but its gaming and VC diversions divert resources from pure-play ad services where INCLUSIVE competes.