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Dentsu Group (4324) : Initiation - Simplification to boost growth and margins

02/23/2021 | 03:33am
Edison Investment Research Limited 
Dentsu Group (4324): Initiation - Simplification to boost growth and margins 
23-Feb-2021 / 08:31 GMT/BST 
London, UK, 23 February 2021 
 Dentsu Group (4324): Initiation - Simplification to boost growth and margins 
Dentsu is making good progress with its plans to streamline its business and integrate its offering to better address 
the needs of its blue-chip client base, including 95 of the world's top 100 advertisers. The balance sheet has been 
strengthened by the sale of most of the Recruit shareholding and Dentsu is considering a sale and leaseback of its 
Tokyo headquarters. A ¥30bn share buyback is intended for FY21. Restructuring inevitably means some short-term 
disruption, but this should drive revenue growth (targeted at 3-4% CAGR FY21-24) and improve margins. The valuation, 
while in line with peers, is yet to reflect the programme's likely benefits. 
With strong recent performance on news of the restructuring and asset realisations, the valuation has now caught up 
with those of the global holding company peers. Successful implementation of management's plans, simplifying the 
structure and driving profitability, should help drive shareholder value and underpin the rating. 
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1170319 23-Feb-2021

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February 23, 2021 03:32 ET (08:32 GMT)

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