角川（9468 JP）第四季度后的更新：出版业务疲软，游戏业务增长前景明朗

FY3/24AFY3/25AFY3/26EFY3/27E258.1282.9296.7309.31.9x1.7x1.6x1.6x25.426.633.830.819.0x18.2x14.3x15.7x Shunki Nakamura, CFA * | Equity Analyst+81(0)80 8120 7130 | snakamura@jefferies.comAtul Goyal, CFA ^ | Equity Analyst65 6551 3965 | agoyal@jefferies.com The Long View: KADOKAWAInvestment Thesis / Where We Differ•We believe a solid domestic animation/comics market is driven bystructural penetration of e-books and supports expansion overseas.•Consensus estimates are likely to be lowered to factor in the cyberattackimpact on publishing and web service.Base Case,¥3790, -1%•The market factors in the long-term potentialofKADOKAWA'sContent,Animation/Film, and Game businesses.•Price target of ¥3,790 is based on SOTPanalysis. Our PT equates to an FY3/27 P/E of29.6x.Sustainability MattersTop Material Issue(s):We believe Employee Engagement, Diversity, & Inclusion is the mostimportant. IP contents are created by creators and editors. Keeping employees healthy and motivatedis important for productivity and sustainability of business.Human Rights & Community Relationsarealso important. Japan, with few government restrictions, is a good place to create animation content.However, with international delivery increasingly easier via online channels, age-appropriateness forminors is an important consideration.Company Target(s):By FY30, KADOKAWA plans to reduce GHG by 50% (from FY21) and achievecarbon-neutral status in FY50. By FY30, to raise proportion of executive managers to 30% (from 23.9%in FY22).Qs to Mgmt:How about disclosing more detailed quantitative data about human capital andengagement and setting quantitative targets?Please see important disclosure information on pages 7 - 12 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Publication,Upside Scenario,¥4440, +16%•Continued growth in overseas publicationbusiness.•Losses decrease in "Others" segment.•Big hit content and improvement in OPM ofVideo segment.•Web service (Nico Nico) profit decline stopsvia regained momentum/cost savings.•Higher multiple is applied to each businessdue to strong performance.•Upside price target of ¥4,440 is based onSOTP analysis. Our upside PT equates to anFY3/27E P/E of 34.6x. Downside Scenario,¥3320, -13%•Printed publication market shrinks faster thanwe expected.•Loss of interest in Japanese animation/comics in overseas markets.•Game segment profit declines as it fails toproduce a hit.•Web service (Nico Nico) shrinks faster thanwe expected as new social media platformscontinue to attract attention and users stayaway from Nico Nico.•Improvement in cost reduction stops.•Lower multiple is applied to each business dueto earnings disappointment.•Downside price target of ¥3,320 is based onSOTP analysis. Our downside PT equates toan FY3/27E P/E of 25.9x.Catalysts•Anime hit(s), especially anime works based onother publishers' comics.•Large title announcement by FromSoftware. 2 Forecasts and ValuationExhibit 3 - Our Forecast Changes - KADOKAWA.Kadokawa (9468 JP)(¥mn)RevenuePublicationAnimation/FilmGameWeb ServiceEducationOthers/AdjustmentOPOP MarginPublicationAnimation/FilmGameWeb ServiceEducationOthersAdjustmentNPNet Profit MarginEPS (¥)DPS (¥)Source: Company data, Jefferies est.Exhibit 4 - Our Forecast vs. Consensus (Factset).Estimates vs Consensus(¥mn)RevenueOperating ProfitNet ProfitEPS (¥)Source: Company data, Jefferies est., FactSetExhibit 5 - SOTP Valuation of KADOKAWA.PublicationAnimation/FilmGameWeb service (Nico Nico)EducationOthers segmentOne-offOthersNet cash in FY3/26eConsolidatedNumber of sharesPT (¥)BusinessSource: Company data, JefferiesPlease see important disclosure information on pages 7 - 12 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. ActualActualFY3/24FY3/25258,109277,915141,967151,36746,06051,09225,35133,59721,39918,03813,39015,1199,94218,45416,6517.1%10,3604,5747,9503621,727-4,399-2,12011,3844.4%83.430ActualActualFY3/24FY3/25258,109277,91518,45416,65111,38483.415,2496,64810,6513,405(2,243)(3,872)30,219FY3/27OP(¥mn) Exhibit 6 - (Ref) Long-Term Fair Value Estimate of KADOKAWA.PV of 5-yr (c)197,40348,126152,34224,050140,74926,5101,3851,02772,88311,936-14,554-6,0020-59,709124,066614,565146.54,190Long-termvalue (¥mn)Source: Company data, JefferiesExhibit 7 - Valuation comparison - KADOKAWA.(Local Currency)Ticker9468-JPE-publications4446-JPE-platform4348-JP3678-JP4755-JPAMZN-USIP contents7832-JP4816-JP8136-JP6758-JPDIS-USCMCSA-USComcast Corporation Class AMANU-US035720-KRNFLX-USGaming7974-JP9684-JP9697-JP9766-JP6460-JP3635-JP2432-JPSource: FactSet, JefferiesPlease see important disclosure information on pages 7 - 12 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Exhibit 8 - P&L - KADOKAWA.Kadokawa (9468 JP)(¥mn)RevenueYoYPublicationYoY% to RevenueAnimation/FilmYoY% to RevenueGameYoY% to RevenueWeb ServiceYoY% to RevenueEducationYoY% to Rev