Zozo Earnings: Profit Overshoot on Continued Efficiency Improvement and Robust Line Yahoo Growth

We slightly raise our fair value estimate for Zozo to JPY 4,900, from JPY 4,880 previously, after lifting our fiscal year 2024 (ending March 2025) profit estimates based on better cost efficiencies and higher Line Yahoo Commerce growth in the second half. We make no changes to our midterm forecasts. We are pleased with Zozo’s continuous improvement in operational and promotion efficiencies, as well as Line Yahoo Commerce’s strong growth momentum. Even if growth slows in the March quarter, we believe Zozo is likely to exceed its fiscal year 2024 operating profit guidance of JPY 64 billion. Nonetheless, we think these positives are already priced in and further upside is limited for the time being. We think the stock is currently fairly valued.