Japan Experts, Extraordinary Performance, Astris Advisory Japan

Astris Advisory Japan

Japan Experts, Extraordinary Performance

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Equity Bottom-Up

<ul><li>Q1-2 FY3/26 results were ahead of expectations in our view, demonstrating sustained growth momentum at the Food Group. All core business segments reported YoY sales growth, demonstrating broad-based progress and execution.</li><li>The Direct Selling Group continues to focus on spending for customer retention and acquisition for residential customers in the Clean Service business, but there was a segmental improvement in profitability QoQ in Q2 FY3/26; we estimate a pronounced improvement here YoY in FY3/27 as the impact of these upfront costs tapers off.</li><li>FY3/26 guidance has been maintained, which appears conservative in our view, with re-arrangement of segment forecasts highlighting resilient strength at the Food Group.</li></ul>

Q1-2 FY3/26 results were ahead of expectations in our view, demonstrating sustained growth momentum at the Food Group. All core business segments reported YoY sales growth, demonstrating broad-based progress and execution.The Direct Selling Group continues to focus on spending for customer retention and acquisition for residential customers in the Clean Service business, but there was a segmental improvement in profitability QoQ in Q2 FY3/26; we estimate a pronounced improvement here YoY in FY3/27 as the impact of these upfront costs tapers off.FY3/26 guidance has been maintained, which appears conservative in our view, with re-arrangement of segment forecasts highlighting resilient strength at the Food Group.

Duskin (4665 JP) - Results Ahead of Expectations, Food Group Maintains Strong Momentum

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<ul><li>Q1 FY03/25 revenue increased 4.6% YoY to JPY47.3bn, with the Direct Selling and Food Groups contributing significantly.</li><li>Operating profit rose 12.8% YoY to JPY2.1bn, with OPM improving 0.4pp YoY to 4.5%.</li><li>Net income attributable to owners increased 24.3% YoY to JPY1.9bn, driven by higher operating and recurring profits.</li></ul>

Q1 FY03/25 revenue increased 4.6% YoY to JPY47.3bn, with the Direct Selling and Food Groups contributing significantly.Operating profit rose 12.8% YoY to JPY2.1bn, with OPM improving 0.4pp YoY to 4.5%.Net income attributable to owners increased 24.3% YoY to JPY1.9bn, driven by higher operating and recurring profits.

Duskin Co Ltd (4665 JP): Q1 FY03/26 flash update

<ul><li>FY03/25 revenue reached JPY188.8bn, a 5.6% YoY increase, with operating profit at JPY7.3bn, up 43.0% YoY.</li><li>FY03/26 forecast includes revenue of JPY195.0bn, operating profit of JPY7.9bn, and net income of JPY9.0bn.</li><li>"Medium-Term Management Policy 2028" targets JPY207.8bn revenue and JPY10.6bn net income by FY03/28, with ROE over 7.0%.</li></ul>

FY03/25 revenue reached JPY188.8bn, a 5.6% YoY increase, with operating profit at JPY7.3bn, up 43.0% YoY.FY03/26 forecast includes revenue of JPY195.0bn, operating profit of JPY7.9bn, and net income of JPY9.0bn."Medium-Term Management Policy 2028" targets JPY207.8bn revenue and JPY10.6bn net income by FY03/28, with ROE over 7.0%.

Duskin Co Ltd (4665 JP): Full-year FY03/25 flash update

<ul><li>Outperformance at the Food Group – Q1-3 FY3/25 results demonstrated the ongoing strength and outperformance at the Food Group, with the Mister Donut franchise maintaining high growth and sustaining margin expansion.</li><li>The Direct Selling Group delivered a recovery in profitability YoY, which is a positive optic but derived from one-time events; with flat sales growth YoY, the underlying trend denotes a business making limited headway in delivering growth.</li><li>With unchanged FY3/25 guidance, we expect no major surprises in Q4 FY3/25 but will pay close attention to the release of the new medium-term plan covering FY3/26-FY3/29, which will be a key event.</li></ul>

Outperformance at the Food Group – Q1-3 FY3/25 results demonstrated the ongoing strength and outperformance at the Food Group, with the Mister Donut franchise maintaining high growth and sustaining margin expansion.The Direct Selling Group delivered a recovery in profitability YoY, which is a positive optic but derived from one-time events; with flat sales growth YoY, the underlying trend denotes a business making limited headway in delivering growth.With unchanged FY3/25 guidance, we expect no major surprises in Q4 FY3/25 but will pay close attention to the release of the new medium-term plan covering FY3/26-FY3/29, which will be a key event.

Duskin (4665 JP) - Entering a Critical Phase

<ul>
<li>The key takeaway from the Q1-2 FY3/25 result is that Duskin is making solid strides forward, although previous earnings projections appear to have been too ambitious.</li>
<li>Management has experienced challenges in aligning earnings guidance with actual performance, and there is a risk over whether it can deliver the planned ROI on the major ¥21bn capex automation project at the Direct Selling Group.</li>
<li>The Food Group continues to perform positively towards its full potential at ‘Mister Donut’, and we believe this segment will continue to be the core contributor to earnings growth.</li>
</ul>


The key takeaway from the Q1-2 FY3/25 result is that Duskin is making solid strides forward, although previous earnings projections appear to have been too ambitious.
Management has experienced challenges in aligning earnings guidance with actual performance, and there is a risk over whether it can deliver the planned ROI on the major ¥21bn capex automation project at the Direct Selling Group.
The Food Group continues to perform positively towards its full potential at ‘Mister Donut’, and we believe this segment will continue to be the core contributor to earnings growth.


Duskin (4665) - Forward Momentum Moderated

Japan

DUSKIN CO., LTD. sells and leases cleaning equipment and commodity. The Company operates food franchise chain as well.

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Duskin Co Ltd (4665 JP)

Duskin (4665 JP) - Results Ahead of Expectations, Food Group Maintains Strong Momentum

FY3/26 guidance has been maintained, which appears conservative in our view, with re-arrangement of segment forecasts highlighting resilient...

Astris Advisory Japan