MatsukiyoCocokara & Co.（3088.T）Revising forecasts： Strong sales to be a means of strengthening competitiveness

Investment Rating - The report maintains a Buy rating for MatsukiyoCocokara & Co. with a revised 12-month price target of ¥2,730, down from ¥2,960 [2][5][6]. Core Insights - The merger of Matsumoto Kiyoshi Holdings and Cocokara Fine in October 2021 has led to improved gross margins and is expected to enhance profitability through better personnel allocation, store openings, and logistics optimization [3][4]. - The company is anticipated to benefit from a recovery in foreign visitors to Japan, which will contribute to growth in same-store sales driven by differentiated products and industry consolidation initiatives [3][4]. Earnings Forecasts - For FY3/25, sales are expected to reach ¥1,054.6 billion with an operating profit (OP) of ¥77.4 billion, reflecting a 2% year-over-year increase. The OP margin is projected at 7.3% [4][7]. - In FY3/26, sales are forecasted to grow to ¥1,087.3 billion with an OP of ¥85.0 billion, marking a 10% increase from the previous year [4][7]. - Same-store sales growth is estimated at 1.0% year-over-year for FY3/25 [4]. Valuation Metrics - The revised price target of ¥2,730 corresponds to a price-to-earnings ratio (PER) of 21.5 times the FY3/25 earnings per share (EPS) estimate of ¥126.9 [5][6]. - The report indicates a market capitalization of ¥946 billion (approximately US$6.40 billion) and an average daily trading volume of 1,579,000 shares [6][8]. Financial Highlights - The company reported revenues of ¥951.2 billion and an operating profit of ¥62.3 billion for FY3/23, with a significant increase in sales projected for FY3/24 at ¥1,022.5 billion [7][9]. - The net profit for FY3/25 is expected to be around ¥52.1 billion, with a slight decrease from the previous estimate of ¥53.7 billion [4][9]. Profitability and Valuation Ratios - The operating profit margin is projected to be 7.3% for FY3/25, with an increase to 7.8% in FY3/26 [4][7]. - The report highlights a return on invested capital (ROIC) of 18.8% for FY3/25, indicating strong profitability [7][9]. Cash Flow and Balance Sheet - The cash flow from operating activities is expected to be ¥73.6 billion for FY3/25, with a free cash flow (FCF) of ¥43.8 billion [11]. - Total assets are projected to be ¥717.2 billion for FY3/25, with total liabilities at ¥196.8 billion, indicating a healthy balance sheet [10].