Dentsu Group (TYO: 4324)

Last close As at 18/05/2024

JPY4,330.00

41.00 (0.96%)

Market capitalisation

JPY1,169,815m

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

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Sector

TMT

Equity Analyst

Fiona Orford-Williams

Fiona Orford-Williams

Director, TMT

Milo Bussell

Associate Analyst, Consumer and Media

Max Hayes

Max Hayes

Associate Analyst

Key Management

  • Hiroshi Igarashi

    President & CEO

  • Kate Stewart

    IR director

  • Yushin Soga

    CFO

Balance Sheet

Forecast net debt (¥m)

25700

Forecast gearing ratio (%)

3

Share Price Performance

Price Performance
% 1M 3M 12M
Actual 1.9 (0.1) (4.8)
Relative 0.4 (4.2) (26.1)
52 week high/low ¥4897.0/¥3586.0

Financials

Dentsu’s Q1 results indicate a slow start to the year, with organic net revenue down by 3.7%. However, prospects are improving, buoyed by new business wins and weighted to H2, which leave full year expectations (and our forecasts) unchanged. The One dentsu initiative, bringing together skill sets in consulting, technology, media and creative, is supporting improved pitch win rates, and giving greater coherence and consistency to the group product and service offering. We expect this to be a central element of the new management medium-term strategy, set to be unveiled during H2. The rating remains at a substantial discount to global peers, which we anticipate will narrow as evidence of renewed growth builds.

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 8.9 0.1
2023A 1289301.0 175742.0 151315.0 337.0 12.8 0.1
2024E 1356700.0 203377.0 159804.0 380.0 11.4 0.1
2025E 1393000.0 218527.0 178741.0 403.0 10.7 0.0

Thematics

thematic

TMT

MediaWatch – Rinse and repeat

thematic

TMT

MediaWatch – Still waiting…

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