Dentsu Group

CN: 4324

Market CapJPY1,286,307m

Last Close JPY4460

Dentsu Group is a holding company with two operational networks: Dentsu Japan Network (DJN) and Dentsu International (DI). Operating in over 145 countries, Dentsu Group provides a wide range of client-centric integrated communications, media and digital services.

Investment summary

Dentsu has edged up its FY22 guidance for organic growth to a range of 4–5%, from 4% previously, following a strong Q122 performance, particularly at Dentsu International (DI). Customer Transformation & Technology (CT&T) continues to build, accounting for 31.5% of group net revenues in the period. Management remains confident of a good runway of growth. Group operating margin rose from 20.2% in Q121 to 21.2%, up 140bps at constant currency. FY22 guidance remains for a 17.7% operating margin, implying some circumspection on costs for the remainder of the year.

Y/E Dec	Revenue (¥m)	EBITDA (¥m)	PBT (¥m)	EPS (fd) (¥)	P/E (x)	P/CF (x)
2020A	939243.0	90063.0	123470.0	249.0	17.9	N/A
2021A	1085592.0	195006.0	146021.0	389.0	11.5	0.0
2022E	1225000.0	207128.0	168635.0	414.0	10.8	0.1
2023E	1275000.0	214528.0	176604.0	445.0	10.0	0.1

Industry outlook

In January, Dentsu lifted its global ad spend forecast to +9.2% for FY22, following a better-than-anticipated recovery in FY21, with further gains of +4.6% for FY23 and +5.8% for FY24 pencilled in. Digital spend is set to account for 55.5% of global ad spend in FY22, with linear TV the next largest media, making up 26.9% of global spend. The Japanese ad market still lags the digital transition curve, with TV prominent, but faster growth in digital will improve digital’s share of spend to 41.1% in FY21, still well below the global share.

Last updated on 24/05/2022