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Shiseido Co Ltd 4911

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Stock XTKS Rating as of
JPY 4,196.00 −21.00 (0.50%)
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Company Report

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Shiseido's China Recovery Is on the Way; Restructuring Crucial to Rebuilding Japan's Margins

Jeanie Chen

Regaining growth momentum in Japan and China, the largest two markets, is on the top of Shiseido’s agenda post COVID-19. The strategic shift of its focus to prestige skincare has enabled Shiseido to channel resources to its core competence. Yet, the bet on China has taken its toll after a notable slowdown in China’s consumption and thus beauty spending. Shiseido plans to beef up marketing investment through 2025, preparing for growth acceleration and margin expansion through 2027. The recovery of Japan’s premium (midpriced) cosmetic sales and normalization of margins in China play the most critical roles to attaining its profit margin target of 12% by 2025, in our opinion.

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Price vs Fair Value

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4911 is trading at a 24% discount.
Price
JPY 4,242.00
Fair Value
JPY 1,614.00
Uncertainty
High
1-Star Price
JPY 2,438.00
5-Star Price
JPY 7,118.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Shiseido is well poised to reap the benefits of the global premiumization trend and consumers’ shift of spending to skincare given its competitive edges in skincare innovations and a renewed strategy of customer-centric product launches.

Bears

The U.S. recessions could weigh on global consumer sentiment, disrupting the premiumization trend and depressing spending on beauty products.

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Trading Information

Previous Close Price
JPY 4,217.00
Day Range
JPY 4,132.00–4,207.00
52-Week Range
JPY 3,740.00–7,160.00
Bid/Ask
JPY 4,195.00 / JPY 4,202.00
Market Cap
JPY 1.68 Tril
Volume/Avg
2.1 Mil / 3.1 Mil

Key Statistics

Price/Earnings (Normalized)
50.36
Price/Sales
1.72
Dividend Yield (Trailing)
1.43%
Dividend Yield (Forward)
1.43%
Total Yield
1.42%

Company Profile

Shiseido is a leading Japanese cosmetics manufacturer. Founded in 1872, the first Western-style pharmacy in Ginza, Tokyo, it is one of the oldest cosmetics companies globally. Shiseido’s suite of 31 brands, including its namesake brand and luxury Clé de Peau Beauté, has an 9.3% share of Japan’s beauty and personal care market and 18.3% share of Japan’s premium segment according to Euromonitor. It is also ranked No. 3 after Estée Lauder and L’Oréal, with 7.6% market share in the global premium skincare space, thanks to a strong presence in China. China, Japan, and western markets each account for about 25% of sales, followed by 15% of travel retail, and 6% in Asia. Its distribution channels include department stores, drugstores, specialty retailers, travel retailers, and e-commerce.
Sector
Consumer Defensive
Industry
Household & Personal Products
Stock Style Box
Large Growth
Total Number of Employees
35,859
Website
http://www.shiseido.co.jp

Competitors

Valuation

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Metric
4911
OR
EL
Price/Earnings (Normalized)
 50.3634.4196.20
Price/Book Value
 2.718.119.25
Price/Sales
 1.725.753.51
Price/Cash Flow
 20.8829.6139.92
Price/Earnings
4911
OR
EL

Financial Strength

Metric
4911
OR
EL
Quick Ratio
 0.750.700.87
Current Ratio
 1.281.101.36
Interest Coverage
 4.2135.252.79
Quick Ratio
4911
OR
EL

Profitability

Metric
4911
OR
EL
Return on Assets (Normalized)
 2.14%12.99%3.09%
Return on Equity (Normalized)
 4.47%23.11%12.28%
Return on Invested Capital (Normalized)
 3.01%17.20%5.04%
Return on Assets
4911
OR
EL
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