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%.
Hiroshi Igarashi
President & CEO
Kate Stewart
IR director
Forecast net cash (¥m)
187936
Forecast gearing ratio (%)
N/A
% | 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 |
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 |
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