SUGI HOLDINGS (7649): Fine tuning our estimates and price target, reiterating our Overweight rating

Research evidence excerpt

SUGI HOLDINGS (7649): Fine tuning our estimates and price target, reiterating our Overweight rating

(2) building a community-based integrated care

model. This involves honing the existing core businesses, specifically (1) expertise

and use of digital transformation (productivity gains in the drugstore and dispensing

businesses and capturing higher-value prescriptions), (2) advancing private brands

(rebranding and stronger product development through supply-chain optimization),

(3) new store openings (the three major metropolitan areas, area dominance, and

combining store formats), and (4) improving ROIC (a shift to asset-light operations

and working-capital improvements).

• The company plans to use cash generated mainly from the core businesses

(drugstores and dispensing) to create and expand adjacent businesses, specifically

broadening customer touchpoints (wellness, inbound demand, and healthcare/

nursing care) and expanding the business model (monetizing data and e-commerce/

OMO models). At the same time, as a consolidation strategy in related areas, the

company cites horizontal integration (continuing its M&A strategy for other

drugstores and dispensing pharmacies, leading industry restructuring through the

provision of infrastructure), and vertical integration (in upstream areas, optimizing

supply chain management (SCM) on the strength of its scale and data). Regarding

the company’s horizontal strategy, we are also watching progress with its tie-up with

Trial Holdings, with which it has formed a comprehensive strategic alliance.

• Regarding its capital policy, the company is stepping up efforts to boost profits

(strengthening health and beauty care (H&BC) and counseling, and boosting the