Cosmetics & Personal Care / Paper & Packaging Sector

Research evidence excerpt

Cosmetics & Personal Care / Paper & Packaging Sector

Cosmetics & Personal Care: Valuing innovation is the key for growth

◼ Subsector

◼ Cosmetics: Cautious

– Domestic: Demand remains strong, but competition on the supply side is intensifying. Inbound demand may fundamentally shift and is also affected by Japan-China

relations.

– Overseas: The China, TR, and U.S. markets are on a recovery trajectory, but only a limited number of Japanese cosmetics companies have been able to capture the

benefits.

◼ Personal care: Neutral

– Each company is promoting selection and concentration, maintaining a firm stance on price increases. Volatility in the Middle East situation affects not only costs but

also household stockpiling demand.

– Overseas: In Asia, quantitative demand growth is slowing due to declining birthrates and aging populations.

◼ To drive growth, each company need to monetize innovation. Increasing healthy life expectancy is one of the key themes for innovation.

Price targets and valuation metrics for the companies under our coverage

Ticker Company Rating Target Price(¥) Valuation metric

3880 Daio Paper Corp N 1.000 12.7x FY2027E adjusted EPS (before goodwill amortization, excluding extraordinary items)

4452 Kao OW 7,800 24x FY2027E EPS

4527 Rohto Pharmaceutical OW 3,100 18x FY2026E fully diluted EPS (before goodwill amortization)

4911 Shiseido N 2,950 21x FY2027E fully diluted EPS excluding non-recurring items

4912 Lion OW 2,150 22x FY2027E fully diluted EPS

4922 KOSÉ Holdings UW 4,700 20x FY2027E goodwill-adjusted EPS

4927 POLA ORBIS HD UW 1,250 23x FY2027E goodwill-adjusted EPS

7956 Pigeon N 1,900 23x FY2027E goodwill-adjusted EPS

8113 Unicharm OW 1,150 23x FY2027E EPS

Source: J.P. Morgan estimates Note: Price targets through December 2026.