Z Holdings Earnings: On Track to Achieve EBITDA Guidance With Cost-Cutting Measures Underway

Z Holdings’ cost-cutting efforts over the past few months have paid off, as it reported the highest quarterly adjusted EBITDA of JPY 99 billion in history, 15.6% up from last year’s June quarter. During the earnings presentation, management continues to emphasize its commitment to profitability, which supports our view that while its full-year revenue guidance of JPY 1.9 trillion seems a bit ambitious given the reduction in promotional spending this year, Z Holdings is likely to generate enough cost-savings for the rest of the year to achieve its full-year adjusted EBITDA guidance of JPY 356 billion–JPY 366 billion. Therefore, we broadly maintain our fiscal-year 2023 and midterm revenue and profit projections, keeping our fair value estimate at JPY 440. We believe the shares are fairly valued currently.