Cosmetics Materializing in Growth path, Upgrading to Buy

研报英文原文证据摘录

Cosmetics Materializing in Growth path, Upgrading to Buy

ential. (6/25 Thursday

1:00-2:30pm : CEO Hasebe will host a top meeting).

Consensus OP forecasts stand at ¥187.0bn for FY26 and ¥199.4bn for FY27. Adjusting for Exhibit 1 - Kao (4452) Cosmetics salesn OPM

and OPM YoY%

the ¥11.5bn gain on land transfer, FY26 implies a shortfall of ¥6.5bn in the underlying business,

JF E 20.0%suggesting a miss versus plan. 90,00080,000 25.0%

70,000 15.0%

For FY27, there may be concerns about a higher hurdle due to the absence of this year’s land 60,000 10.0%5.0%

50,000

transfer gain. However, under the ongoing structural reforms—such as the FY24 divestment 40,000 0.0%-5.0%

of the Healthy business and the pet toiletry business—the company has consistently delivered 30,000 -10.0%

both nominal and actual YoY profit growth, even when net gains on asset sales have 20,00010,000 -15.0%-20.0%

contributed positively. 0 2019/3 2020/3 2021/3 2022/3 2023/3 2024/Q1 2025/Q1 2026/Q1 -25.0%

Cosmetics sales (LHS, JPY mn) OPM changes Cosmetics OPM(RHS)

.

Cosmetics business: China cosmetics delivered revenue growth of +20% in Q1 (vs the high Source: FactSet, Jefferies estimates

20% range in FY25). We think products such as Curél, offering strong value for money, are

Exhibit 2 - Kao (4452) Consensus OP (JPY mn)

well aligned with the growth of mass-market brand, in sales data. In value terms, the business and Price (RHS)

continues to show an expansion trend versus the past, with overall scale increasing even amid 220000 7200

6800SKU rationalization and portfolio renewal. 215000210000205000 7000 6600

200000 6400

6000PT calculation basis: Following the revision of our earnings estimates, our price target is raised 195000190000185000 6200

180000 5600to ¥7,500.