Rakuten (Reduce, ¥400, -60%) Q4 24 Quick Take: Capex guidance lifted in Mobile pushes out cash flow breakeven
Results were mixed again as revenue was in-line with expectations, underlying IFRS EBIT better than Q3, but the Group recorded a net loss. Sequential increase in MNO revenue showed no significant improvement and importantly the company has increased capex guidance for 2025 from “below ¥100bn” to ¥150bn. Cash flow breakeven on mobile remains longer dated than expected in our view and with MNO traction not improving as fast as hoped, we maintain our Reduce recommendation with a ¥400 price target.Rakuten is mainly engaged in the Internet-related business. Along with its affiliates, Co. operates in two business segments. The Internet Services segment is engaged in the operation of electronic commerce sites, including an Internet shopping mall "Rakuten Ichiba," an online cash back site, a travel booking site, portal sites and digital contents sites; the sale of advertising on Co.'s sites; the provision of messaging and communication services; and the management of a professional baseball team "Tohoku Rakuten Golden Eagles." FinTech segment is engaged in the provision of Internet banking services and online securities trading services, and the credit card and life insurance businesses.
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