Raise our price objective; reduced US 1H revenue decline forecast, reiterate Buy

研报英文原文证据摘录

Accessible version

Sanrio (8136)

Raise our price objective; reduced US 1H

revenue decline forecast, reiterate Buy

Reiterate Rating: BUY | PO: 1,500 JPY | Price: 1,273 JPY

31 July 2026

Reiterate Buy; raise PO from ¥1,300 to ¥1,500

We continue to derive our price objective (PO) using a DCF methodology. By rolling the

valuation period forward by one year, we now model FY3/27-FY3/36 and arrive at a

revised PO of ¥1,500. The applied WACC remains unchanged at 6.9% (risk-free rate:

2.0%; equity risk premium: 5.5%). Our PO corresponds to a P/E of 28x based on our

FY3/27 EPS forecast. We believe the company's strategy to expand the global popularity

of its character portfolio is progressing steadily and should support earnings growth of

more than 10% over the next five years. We therefore reiterate our Buy rating.

Forecast 1Q OP of ¥24.1bn, US revenue growth of -0.4%

We forecast 1Q FY3/27 operating profit (OP) of ¥24.1bn (+19% YoY, operating margin

of 48%), versus our previous estimate of ¥19.7bn. This mainly reflects a higher profit

forecast for Asia (primarily mainland China), revised to ¥7.8bn from ¥2.8bn. In the

previous quarter, license revenue from overseas subsidiaries booked under the

standalone Overseas Business Division reached ¥9.5bn, well above our forecast of

¥7.1bn, indicating stronger overseas business momentum. We therefore raise our

FY3/27 operating profit forecast to ¥91.9bn from ¥89.4bn and see upside to company

guidance of ¥89.5bn.

North American revenue growth, European performance

We forecast US dollar-based revenue growth of -0.4% YoY in 1Q, improving from -7.0%

in 3Q FY3/26 and -5.4% in 4Q FY3/26. We then expect growth to turn positive at +2.6%

YoY in 2Q. We believe management expects revenue growth to return in 2H, making US

revenue trends in 1H a key focus. We will also monitor the growth trajectory of the

European business and revenue trends within the Overseas Business Division.

Estimates (¥)

EPS

EPS Change (YoY)

Dividend / Share

BPS

Valuation

P/E

Dividend Yield*

P/B

EV/ EBITDA*

Free Cash Flow Yield*

3/25A

3/26A

3/27E

3/28E

3/29E

Other GAAP

35.32

141.6%

11

83.8

45.33

28.3%

14

122.0

52.76

16.4%

16

157.4

60.64

14.9%

18

198.8

70.11

15.6%

21

…