Dentsu Group

Overview
Price performance
Financials
Research
Thematics

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.

Customer Transformation and Technology should benefit from structural tailwinds as companies invest in optimising their responses to the increasing demands of their own customers, although short-term economic uncertainty has slowed the sales cycle for larger projects across the industry. Dentsu’s December update on forecast global ad spend reduced estimated FY23 growth from +3.3% to +2.7%, with 4.6% for FY24 (was 4.7%), 4.2% (3.8%) for FY25 and 4.3% for FY26 pencilled in. Digital spend is estimated at 58% of FY23 global ad spend, with the growth rate slowing.

Latest Insights

TMT |
Update

20.02.24

Dentsu Group — Return to organic growth forecast for FY24

TMT |
Update

17.11.23

Dentsu Group — One dentsu initiative set to improve efficiency

TMT |
Outlook

18.08.23

Dentsu Group — Set for a stronger H223

TMT |
Update

18.05.23

Dentsu Group — FY23 ambitions weighted to second half

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Sector

TMT

Equity Analyst

Fiona Orford-Williams

Director, TMT

Milo Bussell

Associate Analyst, Consumer and Media

Max Hayes

Associate Analyst

Key Management

Hiroshi Igarashi

President & CEO
Kate Stewart

IR director
Yushin Soga

CFO

Balance Sheet

Forecast net debt (¥m)

20834

Forecast gearing ratio (%)

Share Price Performance

Price Performance
%	1M	3M	12M
Actual	(0.8)	6.1	(11.9)
Relative	3.5	0.8	(32.4)
52 week high/low	¥4960.0/¥3586.0

Financials

Dentsu’s FY23 net revenue was a touch above guidance at Q3, with a better-than-expected operating margin reflecting a good Q4 in Japan, further boosted by a short delay in an IT project pushed out to Q124. The results were accompanied by the news of a change in global CFO, with the role reverting to Yushin Soga, who held the role until January 2023. As anticipated, net revenue ex-Japan declined, although there was some trading improvement in the US in Q4. A thorough business review is now in progress, with the next mid-term plan due early in H2. In the meantime, the balance sheet is strong, with leverage reduced to 0.6x EBITDA, and share buybacks will be resumed. We regard the rating as undemanding.

Y/E Dec	Revenue (¥m)	EBITDA (¥m)	PBT (¥m)	EPS (fd) (¥)	P/E (x)	P/CF (x)
2022A	1243883.0	217500.0	187589.0	485.0	8.6	0.1
2023A	1289301.0	175742.0	151315.0	337.0	12.4	0.1
2024E	1356700.0	203377.0	159804.0	380.0	11.0	0.1
2025E	1393000.0	218527.0	178741.0	403.0	10.4	0.0