Unicharm Earnings: Profit Missed but Long-Term Growth Outlook Is Intact; Reducing Fair Value by 5%

Wide-moat Unicharm reported fiscal 2024 results (ending December 2024) that trailed our estimates on revenue and operating profit. The miss was primarily due to lower margins in Asian markets while the domestic market continued to deliver strong margins. We lowered our fair value estimate slightly to JPY 1,800 per share, from JPY 1,900 per share, as we reduced 2025-28 operating profit forecasts by 3% to 5% to account for the weaker profit numbers. However, we continue to view Unicharm’s shares as undervalued and our long-term view of its competitive advantage is unchanged.