Dentsu Group - FY23 ambitions weighted to second half
Dentsu Group had demanding Q123 on Q122 comparisons and, with the acquisition contributions, we are not too concerned about the read-across for the rest of FY23, with performance skewed to H2. Progress in Customer Transformation and Technology (CT&T), up 6.7% in Q123 and now 35% of group net revenue, should buoy medium-term growth. Tag, the acquisition announced in March and expected to complete in early Q323 (subject to regulatory clearances), is another step towards the 50% CT&T target. We anticipate a return to margin expansion in FY24 as one-off factors retreat, the transition progresses and cost benefits from the ‘One dentsu’ initiative start to flow. The valuation remains at a marked discount to global peers.Dentsu is an advertising company. Co. provides a diverse range of services befitting a solution-building partner with the ability to address various client issues, including management, business activities and marketing plans, at both the corporate and organizational levels. Co. operates in two business segments. Domestic segment is engaged in the provision of domestic advertising, marketing and contents business services, as well as the information system development and consulting, and the provision of real estate and casualty insurance agency services. Overseas segment is engaged in the advertising and marketing services outside of Japan.
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