Dentsu Group

CN: 4324

JPY1126240m market cap

JPY3710 last close

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

Investment summary

Dentsu is making good progress with its plans to streamline its business and integrate its offering to better address the needs of its blue-chip client base, including 95 of the world’s top 100 advertisers. The balance sheet has been strengthened by the sale of most of the Recruit shareholding and Dentsu is considering a sale and leaseback of its Tokyo headquarters. A ¥30bn share buyback is intended for FY21. Restructuring inevitably means some short-term disruption, but this should drive revenue growth (targeted at 3–4% CAGR FY21–24) and improve margins. The valuation, while in line with peers, is yet to reflect the programme’s likely benefits.

Y/E Dec
Revenue (¥m)
EBITDA (¥m)
PBT (¥m)
EPS (fd) (¥)
P/E (x)
P/CF (x)
2019A 1047881.0 160279.0 101340.0 271.0 14.4 0.1
2020A 939243.0 90061.0 123470.0 249.0 15.7 0.2
2021E 954424.0 65966.0 124710.0 269.0 14.5 0.1
2022E 1010255.0 159866.0 149710.0 335.0 11.7 0.3
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Sector
TMT
Share price graph
Balance sheet
Forecast net debt (¥m) 44200
Forecast gearing ratio (%) 7
Price performance
%
1m
3m
12m
Actual 23.6 13.2 27.6
Relative* 19.5 3.9 7.2
52-week high/low ¥3905.0/¥1870.0
*% relative to local index
Key management
Kate Stewart IR director