PSA Internet: CyberAgent (4751) FY17 Results Beat Consensus – FY18 Outlook: Tough Conditions for Games / All Eyes on AbemaTV
CyberAgent (4751) FY17 Results Beat Consensus – FY18 Outlook: Tough Conditions for Games / All Eyes on AbemaTV
CyberAgent (CA) reported FY17 (September year-end) results as follows:
OP was ¥30.70bil on revenue of ¥371.36bil, exceeding both consensus estimates (OP ¥29.41bil / sales ¥362.20bil) and our forecasts (OP ¥29.44bil / sales ¥364.25bil), mainly due to the better than expected performance of the volatile Investment Development Business. Gains on the sale of investment securities led to a 288.4% YoY rise in sales to ¥6.79bil and to OP expanding12.7x YoY to ¥4.83bil. Revenue figures of the other segments (Internet Advertisement Business, Game Business, Media Business and Other Business) are in harmony with our expectations.
Key Points
- Game division advertising costs increased, leading to OPM dropping below 20%, to 18.9%. This highlights the fact that Japan’s smartphone game market is increasingly competitive and that players like CA are gaining market share at the expense of the bottom line. FY18 will be a difficult period for the Game Business with just two games in the pipeline, but there are 10 titles planned for FY19.
- We remain positive about prospects for AbemaTV given the strong content line-up, though continued investment will dampen FY18’s profits.
- The company eyes an OP of ¥30.0bil (-2.3% YoY) on sales of ¥420.0bil (+13.1% YoY) in FY18. At the moment, we think this guidance is reasonable. We are in the process of revising our forecasts.
CyberAgent is an information technology company. Media segment is engaged in the operation of internet TV station "AbemaTV," free live streaming programs without subscription "FRESH!," blog service "Ameba," matching services "Tapple" and music streaming service "AWA." Game segment offers a variety of games for smartphones such as "GRANBLUE FANTASY." Internet Advertisement segment is engaged in the provision of internet advertising agency services. Investment Development is engaged in the corporate venture capital business, as well as the establishment and operation of investment fund. Others segment is engaged in the operation of smartphone media.
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
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