REAL-TIME GLOBAL RESEARCH
Downgrade to UW: Competitive Climate Tougher than Expected
Key takeaways
- Lower OP forecasts from ¥5.0bn to ¥0.5bn for F2/27 and from ¥6.0bn to ¥3.8bn for F2/28, mainly due to higher ad expenses and lower sales forecasts.
- Change basis for valuation from dividend yield to P/E: Cut PT from ¥1,900 to ¥800 and downgrade from EW to UW.
- Earnings forecasts: Main drivers of our F2/27 OP forecast cut from ¥5.0bn to ¥0.5bn are lower sales assumptions due to hotter competition and higher advertising expenses.
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Research evidence excerpt
Mid Small Cap/Non-Manufacturer | Japan
Dip facing unprecedentedly challenging environment due to competition with Indeed. Considering the sustainability of its progressive dividend policy, we downgrade from EW to UW.
Key Takeaways
Lower OP forecasts from ¥5.0bn to ¥0.5bn for F2/27 and from ¥6.0bn to ¥3.8bn for F2/28, mainly due to higher ad expenses and lower sales forecasts.
Change basis for valuation from dividend yield to P/E: Cut PT from ¥1,900 to ¥800 and downgrade from EW to UW.
Earnings forecasts: Main drivers of our F2/27 OP forecast cut from ¥5.0bn to ¥0.5bn are lower sales assumptions due to hotter competition and higher advertising expenses. Indeed, the core business of Recruit Holdings (6098; covered Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare ** = Based on consensus methodology
- = GAAP or approximated based on GAAP e = Morgan Stanley Research estimates by Tetsuro Tsusaka), has significantly increased domestic advertising for Town Work, its part-time job listing platform. This move has intensified competition for job
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