Stock Analysis & Valuation IDOM Inc. (7599.T)

• Previous Close: ¥1,522.00
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, ¥	Upside, %
Artificial intelligence (AI)	1611.35	6
Intrinsic value (DCF)	409.76	-73
Graham-Dodd Method	873.07	-43
Graham Formula	3420.06	125

Strategic Investment Analysis

Company Overview

IDOM Inc. (7599.T) is a leading Japanese automotive retailer specializing in the purchase and sale of used and new cars. Operating under the Gulliver brand, the company boasts a vast network of approximately 500 stores across Japan and internationally. Founded in 1994 and headquartered in Tokyo, IDOM Inc. has established itself as a key player in the Auto - Dealerships sector within the Consumer Cyclical industry. The company, formerly known as Gulliver International Co. Ltd., rebranded to IDOM Inc. in July 2016 to reflect its expanded business model. IDOM Inc. leverages its extensive retail footprint and strong brand recognition to cater to a broad customer base, offering both affordability and reliability in the used car market. With a market capitalization of approximately ¥103.1 billion, IDOM Inc. remains a significant contender in Japan's competitive automotive retail landscape.

Investment Summary

IDOM Inc. presents a mixed investment profile. The company's strong revenue of ¥496.7 billion and net income of ¥13.4 billion for the fiscal year ending February 2025 highlight its operational scale and profitability. However, negative operating cash flow of ¥-20.0 billion and significant total debt of ¥79.3 billion raise concerns about liquidity and financial stability. The company's beta of -0.05 suggests low correlation with the broader market, which may appeal to risk-averse investors. The dividend yield, with a dividend per share of ¥40.63, adds an income component. Investors should weigh IDOM's established market position against its financial leverage and cash flow challenges.

Competitive Analysis

IDOM Inc. competes in the highly fragmented Japanese used and new car dealership market. Its competitive advantage lies in its extensive retail network under the Gulliver brand, which provides widespread customer access and brand trust. The company's focus on used cars aligns with Japan's growing demand for affordable vehicles, positioning it well against competitors. However, IDOM faces intense competition from both domestic and international players, particularly those with stronger financials or more diversified service offerings. The company's negative operating cash flow and high debt levels could limit its ability to invest in digital transformation or expansion, areas where competitors may gain an edge. IDOM's scale and brand recognition help mitigate these risks, but sustained profitability will depend on improving operational efficiency and managing debt.

Major Competitors

• Mazda Motor Corporation (7261.T): Mazda is a major Japanese automaker with a strong presence in both new and used car markets. Its brand strength and manufacturing capabilities give it an edge over IDOM in new car sales. However, Mazda lacks IDOM's extensive used car retail network, limiting its competitiveness in that segment.
• Toyota Motor Corporation (7203.T): Toyota dominates the Japanese automotive market with unparalleled brand loyalty and a vast dealership network. Its financial strength and hybrid vehicle leadership pose significant competition to IDOM, especially in new car sales. However, Toyota's focus on premium segments leaves room for IDOM in the affordable used car market.
• Mitsubishi Motors Corporation (7211.T): Mitsubishi Motors competes with IDOM in both new and used vehicle segments. While smaller than Toyota or Mazda, Mitsubishi's SUV focus and regional strengths challenge IDOM in specific market niches. Its financial instability compared to IDOM may limit aggressive pricing strategies.
• Yoshinoya Holdings Co., Ltd. (9861.T): Primarily a fast-food chain, Yoshinoya Holdings also operates in used car sales through subsidiary Gulliver International. This creates direct competition with IDOM in the used car segment, though Yoshinoya's smaller scale in automotive retail limits its threat level compared to dedicated automakers.