LY Corporation (4689): 1Q results: Signs of structural margin improvement emerge, though AI-driven top-line growth remains some way off

研报英文原文证据摘录

LY Corporation (4689): 1Q results: Signs of structural margin improvement emerge, though AI-driven top-line growth remains some way off

J P M O R G A N Asia Pacific Equity Research

03 August 2026

LY Corporation (4689)

1Q results: Signs of structural margin improvement Not Rated

emerge, though AI-driven top-line growth remains some 4689.T, 4689 JP

way off Price (03 Aug 26):¥447

Slightly Positive: 1Q operating profit came in at ¥101.2 billion, ahead of our Japan Equity Research

estimate of ¥85.5 billion and the Bloomberg consensus forecast of ¥88.9 billion. Games, Internet, Services

In addition to continued strength in the Strategic business, search advertising in the

Junko Yamamura ACMedia business showed signs of bottoming out. Growth in higher-margin account

(81-3) 6736-8644

advertising also contributed, improving the product mix. At the same time, SG&A junko.yamamura@jpmorgan.com

expenses were reduced through AI utilization and other efficiency measures,

Ryo Nakagawa

driving profitability higher. While SG&A reduction in the Commerce business fell (81-3) 6736-8643

short of our forecast, profitability nevertheless improved as outsourcing expenses ryo.nakagawa@jpmorgan.com

were similarly reduced. We view these developments as structural rather than JPMorgan Securities Japan Co., Ltd.

temporary.

• The improvement in the Media business profitability through a better product

mix, together with SG&A reductions associated with AI adoption, represents

a positive trend. In the Commerce business, the top line remained firm, led by

the reuse business and supported by demand for trading card games.

Profitability is also beginning to improve in this segment. We have yet to see

clear evidence that AI is driving top-line expansion, which is why we are only