Dentsu Group (TYO: 4324)

Currency in JPY

Last close As at 26/05/2023

JPY4,575.00

−35.00 (−0.76%)

Market capitalisation

JPY1,236,005m

Dentsu Group is a holding company, operating in over 145 countries. It provides a wide range of client-centric integrated communications, media and digital services.

CT&T benefits from structural tailwinds as companies look to invest to optimise to meet the increasingly demanding expectations of their own customers. Dentsu’s latest FY23 global ad spend forecast is +3.8%, with 4.8% for FY24 and 4.5% for FY25 pencilled in. Digital spend is forecast at 57% of FY23 global ad spend. The Japanese ad market still lags the digital transition curve, with a digital share of 49%, and with TV remaining prominent at 26%.

Dentsu Group_resized

Sector

TMT

Equity Analyst

Fiona Orford-Williams

Fiona Orford-Williams

Director, TMT

Key Management

  • Hiroshi Igarashi

    President & CEO

  • Kate Stewart

    IR director

Balance Sheet

Forecast net cash (¥m)

187936

Forecast gearing ratio (%)

N/A

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (3.7) 5.3 9.6
Relative (8.4) (2.5) (4.2)
52 week high/low ¥4960.0/¥4045.0

Financials

Dentsu Group had demanding Q123 on Q122 comparisons and, with the acquisition contributions, we are not too concerned about the read-across for the rest of FY23, with performance skewed to H2. Progress in Customer Transformation and Technology (CT&T), up 6.7% in Q123 and now 35% of group net revenue, should buoy medium-term growth. Tag, the acquisition announced in March and expected to complete in early Q323 (subject to regulatory clearances), is another step towards the 50% CT&T target. We anticipate a return to margin expansion in FY24 as one-off factors retreat, the transition progresses and cost benefits from the ‘One dentsu’ initiative start to flow. The valuation remains at a marked discount to global peers.

Y/E Dec Revenue (¥m) EBITDA (¥m) PBT (¥m) EPS (fd) (¥) P/E (x) P/CF (x)
2021A 1085592.0 196917.0 146020.0 390.0 11.7 0.0
2022A 1243883.0 216831.0 186478.0 482.0 9.5 0.1
2023E 1269983.0 230210.0 177570.0 454.0 10.1 0.1
2024E 1311500.0 246158.0 200450.0 521.0 8.8 0.1

Thematics

TMT

MediaWatch – April 2023

Digital Marketing and Internet Media Technology Platform

TMT

MediaWatch – January 2023

Consumer

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