Dentsu Group — FY24 prospects weighted to H2

Dentsu Group (TYO: 4324)

Last close As at 18/06/2024

JPY3,946.00

30.00 (0.77%)

Market capitalisation

JPY1,066,072m

More on this equity

Research: TMT

Dentsu Group — FY24 prospects weighted to H2

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.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

TMT

Dentsu Group

FY24 prospects weighted to H2

Q124 update

Media

17 May 2024

Price

¥4,330

Market cap

¥1,170bn

Net debt (¥bn) at 31 March 2024

297.7

Shares in issue

270.2m

Free float

75.8%

Code

DENN

Primary exchange

TSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

1.9

(0.1)

(4.8)

Rel (local)

0.4

(4.2)

(26.1)

52-week high/low

¥4897

¥3586

Business description

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

Next events

H124 results

August 2024

Analysts

Fiona Orford-Williams

+44 (0)20 3077 5739

Milo Bussell

+44 (0)20 3077 5700

Dentsu Group is a research client of Edison Investment Research Limited

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.

Year end

Net revenue (¥bn)

PBT*
(¥bn)

EPS*
(¥)

DPS
(¥)

P/E
(x)

Yield
(%)

12/22

1,119.5

187.6

488

155

8.9

3.6

12/23

1,129.5

151.3

340

140

12.8

3.2

12/24e

1,189.3

159.8

382

140

11.4

3.2

12/25e

1,227.0

178.7

406

141

10.7

3.3

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Japan again produces strongest group performance

Q1 net revenue was up 6.3% year-on-year, representing an organic decline of 3.7%, with a decline having been expected. Operating margin at 10.4% was depressed by the delay of an IT systems implementation project in Japan into the period and full year guidance is maintained at around 15% (we model 15.1%). Performance in Japan has continued to lead the rest of the group, with organic growth of 2.4% as advertising markets recovered, while other regions were mixed, but below the prior year. In the US, tech clients are continuing to rebuild their spending and there has been an uptick in strategy work in Customer Transformation & Technology (CT&T), which may be a precursor to improving conditions. Comparatives ease as the year progresses and earlier client losses cycle out, although we would still expect Q2 to see a small organic revenue decline. This inherently increases the H2 weighting, given the unchanged full year guidance.

Leaning into One dentsu

The new medium-term plan is set to be published in the second half and is likely to build on the One dentsu initiative, including identifying further ‘accelerator’ clients, where relationships can be embedded and expanded with the use of ‘integrated client leads’ to focus on delivery from across Dentsu’s offering. We would also expect to hear more on Merkury, the group’s data, identity and insights technology platform. The imperative remains to drive the group’s top line and return to growth.

Valuation: Waiting for growth

Dentsu’s share price is up 14% year-to-date, with global marketing service group peers’ prices increasing by 17%, albeit that these have divergent performances. Dentsu’s shares trade well below their long-term average of 1.4x EV/net revenue and at a 31% discount to peers on average FY23–25e EV/EBITDA.

Regional divergence in Q1

Japan again led the net revenue performance improvement in Q1, with organic growth of 2.4%. The other regions all underperformed the prior period and we run through the key factors and prospects below.

Exhibit 1: Quarterly results by geography

¥bn

Q123

Q223

Q323

Q423

Q124

Net revenue

Japan

119.6

100.5

106.9

121.9

123.0

Americas

73.2

77.3

82.7

88.8

80.5

EMEA

52.1

53.6

57.9

73.9

57.2

APAC ex-Japan

22.1

26.2

29.4

35.5

24.2

Eliminations

2.4

1.1

2.0

2.2

1.5

Group

269.4

258.7

278.9

322.3

286.4

Underlying operating profit

Japan

33.7

14.8

24.1

30.8

33.9

Americas

13.3

15.2

20.5

24

13.1

EMEA

3.7

2.0

2.3

16.2

(0.7)

APAC ex-Japan

(2.2)

0.4

2.1

7.6

(3.1)

Eliminations

(10.7)

(9.5)

(11.6)

(13.3)

(13.3)

Group

37.8

22.9

37.4

65.3

29.9

Underlying operating margin

Japan

28.2%

14.7%

22.5%

25.3%

27.6%

Americas

18.2%

19.7%

24.8%

27.0%

16.3%

EMEA

7.1%

3.7%

4.0%

21.9%

-1.2%

APAC ex-Japan

-10.0%

1.5%

7.1%

21.4%

-12.8%

Group

14.0%

8.9%

13.4%

20.3%

10.4%

Source: Dentsu Group accounts

Japan in the vanguard

Japan delivered 43% of group net revenue in Q124, with organic growth of 2.4%, to reach a record quarterly high. This is attributed to a good advertising market, with double-digit digital advertising growth and a strong TV market, with TV still representing a substantial element of the Japanese market (23.7% of overall ad spend in 2023, source: Dentsu). CT&T was more challenged, burdened by strong comparatives and some revenue re-categorisation. These comparatives improve into H2 and are further helped by a strong new business performance through the back end of FY23 and into Q124.

Americas: Improving mood music

Americas is the group’s next largest region (28% of group) and here organic growth was -6.6%, having been down 9.3% in Q423 and down 6.6% in Q323, reflecting earlier client losses. The more recent experience has been of a much-improved new business performance, which should help drive revenues across the remainder of the year and give a tailwind into FY25. The region still has a good pipeline of potential new business, which is 89% offensive (ie extending the client reach, rather than simply retaining business that is up for review). There were also encouraging noises on business from tech clients, where last year’s spending reductions had a major impact and repercussions across the sector. For CT&T, the going remains tough, with the relatively buoyant US economy reducing the urgency needed to drive larger transformation projects. The resurgence of strategic work could herald a better outlook.

EMEA still mixed

EMEA represented 20% of Q124 net revenues and organic growth across the region was down by 9.4%, although the individual country performances varied widely. Generally, southern Europe was notably better than the experience in Northern and DACH countries. As with the other regions, the comparatives ease considerably in the second half of the year.

APAC (ex-Japan)

The balance of 9% is contributed by Asia Pacific (APAC) (ex-Japan) and here organic net revenues were down by 7.1%, which was a better performance than earlier internal forecasts. Here again, comparatives ease as the group cycles past client losses in the early months of FY23. Win rates have picked up in China but generally conditions remain sluggish and management focus remains on streamlining and improving the efficiency of the group’s operations in the region.

Valuation

We look at the valuation of Dentsu in comparison to a core set of global peers and have added Stagwell to the peer set, which, although smaller, has considerable ambitions to build its global presence. Publicis has clearly been outperforming the pack, both operationally and in terms of share price performance, and we also note the continuing strong share price performance of Japan-based Hakuhodo. Dentsu’s share price is up by 14% year-to-date, with the Q124 results not providing any major surprises.

When we last carried out this exercise in February, Dentsu’s valuation was sitting at an average 27% discount in EV/EBITDA across the years CY23–25. This has slightly widened and now sits at 31%. We would expect this to narrow as the prospects for improving group performance by implementation of the new mid-term plan come into better focus.

Exhibit 2: Peer comparison

 

Price

Market cap

Ytd

EV/revenue (x)

EV/EBITDA (x)

P/E (x)

Dividend yield

(local CCY)

(US$m)

(%)

CY24

CY23

CY24

CY25

CY23

CY24

CY25

(%)

Publicis

€107

29,492

27

2.0

10.1

9.5

9.1

16.3

14.9

14.1

3.8

Omnicom

US$96

18,760

10

1.5

8.8

8.4

8.0

12.5

12.0

11.2

3.2

Interpublic

US$31

11,760

-6

1.4

7.5

7.5

7.2

11.5

11.0

10.3

3.8

WPP

847p

11,452

13

1.1

6.4

6.7

6.4

74.6

9.4

8.9

5.2

Hakuhodo

¥1,502

3,756

39

0.5

9.9

8.3

8.0

27.8

21.4

20.1

2.1

Stagwell

US$7

1,860

4

1.3

9.6

8.3

7.9

-

8.6

7.7

0.0

Peer average

 

17

1.3

8.7

8.1

7.8

28.5

12.9

12.0

3.0

Dentsu

¥4,220

7,164

14

0.9

6.3

5.5

5.1

12.5

11.1

10.5

3.3

Premium/(discount)

 

 

(3%)

(28%)

(27%)

(32%)

(34%)

(56%)

(14%)

(13%)

9%

Source: LSEG, Edison Investment Research. Note: Prices at 13 May 2024.

Exhibit 2: Financial summary

¥'m

2022

2023

2024e

2025e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

1,243,883

1,289,301

1,356,700

1,393,000

Cost of Sales

(124,383)

(159,786)

(167,400)

(166,000)

Net revenue

1,119,500

1,129,515

1,189,300

1,227,000

EBITDA

 

 

217,500

175,742

203,377

218,527

Operating profit (before amort. and excepts.)

 

 

204,300

163,515

180,000

196,040

Amortisation of acquired intangibles

(28,721)

(30,600)

(36,689)

(36,689)

Exceptionals

(56,849)

(88,065)

(6,111)

0

Share-based payments

0

(500)

0

0

Reported operating profit

118,728

45,300

135,422

159,350

Net Interest

(20,246)

(15,901)

(23,664)

(20,820)

Joint ventures & associates (post tax)

(1,932)

3,400

3,468

3,521

Exceptionals

5,467

301

0

0

Profit Before Tax (norm)

 

 

187,589

151,315

159,804

178,741

Profit Before Tax (reported)

 

 

102,019

33,100

115,225

142,052

Reported tax

(34,982)

(38,500)

(48,325)

(49,718)

Profit After Tax (norm)

139,930

95,165

101,000

112,969

Profit After Tax (reported)

67,036

(5,400)

66,900

92,334

Minority interests

(6,077)

(5,200)

(5,200)

(5,200)

Discontinued operations

0

0

0

0

Net income (normalised)

130,835

89,800

101,034

107,769

Net income (reported)

60,958

(10,700)

61,700

87,134

Average Number of Shares Outstanding (m)

268

264

265

266

EPS - normalised (¥)

 

 

488

340

382

406

EPS - normalised fully diluted (¥)

 

 

485

337

380

403

EPS - basic reported (¥)

 

 

227

(20)

273

347

Dividend (¥)

155

140

140

141

Net revenue growth (%)

16.9

0.9

5.3

3.2

EBITDA Margin to revenue less pass-through costs (%)

19.4

15.6

17.1

17.8

Normalised operating margin to revenue less pass-through costs (%)

18.2

14.5

15.1

16.0

BALANCE SHEET

Fixed Assets

 

 

1,423,928

1,465,069

1,465,954

1,443,639

Intangible Assets

962,100

1,069,800

1,053,562

1,014,124

Tangible Assets

168,859

173,286

190,409

207,532

Investments & other

292,969

221,983

221,983

221,983

Current Assets

 

 

2,317,496

2,243,566

2,397,729

2,527,099

Stocks

3,670

5,253

5,504

5,458

Debtors

1,578,922

1,684,039

1,765,568

1,812,808

Cash & cash equivalents

603,740

423,112

495,495

577,671

Other

131,164

131,162

131,162

131,162

Current Liabilities

 

 

(2,017,695)

(2,026,316)

(2,149,422)

(2,164,761)

Creditors

(1,532,591)

(1,578,952)

(1,672,644)

(1,717,397)

Tax and social security

(30,894)

(30,894)

(30,894)

(30,894)

Short term borrowings

(95,790)

(95,790)

(95,790)

(95,790)

Other

(358,420)

(320,680)

(350,094)

(320,680)

Long Term Liabilities

 

 

(768,403)

(671,658)

(865,087)

(859,470)

Long term borrowings

(436,639)

(431,022)

(425,405)

(419,788)

Other long term liabilities

(331,764)

(240,636)

(439,682)

(439,682)

Net Assets

 

 

955,326

1,010,661

849,174

946,507

Minority interests

(75,060)

(71,100)

(76,300)

(81,500)

Shareholders' equity

 

 

880,266

939,561

772,874

865,007

CASH FLOW

Operating Cash Flow

176,189

109,477

211,092

237,918

Working capital

(3,519)

(60,339)

11,912

(2,440)

Exceptional & other

40,156

83,563

6,803

(1,095)

Tax

(115,764)

(47,600)

(48,325)

(49,718)

Net operating cash flow

 

 

97,062

85,100

181,482

184,665

Capex

(4,585)

(27,600)

(27,600)

(27,600)

Acquisitions/disposals

(40,873)

(148,900)

(11,487)

(10,762)

Net interest

(18,301)

(15,901)

(23,664)

(20,820)

Equity financing

(40,006)

0

(4,948)

0

Net dividends

(37,895)

(42,000)

(35,380)

(37,287)

Other

(24,920)

(11,574)

0

0

Net Cash Flow

(69,518)

(160,874)

78,402

88,197

Opening net debt/(cash)

 

 

(144,352)

(71,311)

103,700

25,700

FX

13,932

(11,000)

0

0

Other non-cash movements

(17,455)

(3,137)

(402)

(403)

Closing net debt/(cash)

 

 

(71,311)

103,700

25,700

(62,093)

Source: Company accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Dentsu Group and prepared and issued by Edison, in consideration of a fee payable by Dentsu Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Dentsu Group and prepared and issued by Edison, in consideration of a fee payable by Dentsu Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Dentsu Group

View All

Latest from the TMT sector

View All TMT content

Research: Financials

Record — AUME momentum and a sharper focus

Record’s Q424 trading update demonstrated continued growth in assets under management equivalent (AUME), which will support management fee growth into FY25. In FY24, AUME grew 17% to US$102.2bn, setting a new milestone in business scale. Net inflows for FY24 were US$6.8bn (FY23: US$9.1bn) or 8% of opening AUME. Performance fees of £5.8m matched the record FY23 figure, and we expect this to offset the negative product mix in FY24. We have reduced our FY24e EPS by 1%, which is affected by £2.4m in IT restructuring and impairment charges announced in March 2024. New CEO Dr Jan Witte is putting a sharper focus on the business, and we have upgraded our FY25e EPS by 5% in anticipation of efficiency improvements after a period of elevated cost inflation.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free