Pigeon（7956.JP）A better than expected recovery in China market share

Investment Rating - The report assigns a "Buy" rating for the company with a 12-month price target of ¥1,700.0, while the current price is ¥1,374 [6]. Core Insights - The company has shown a better than expected recovery in the China market, with its share of the nursing bottle market increasing from 39% to 44% [3]. - Local currency sales in China rose by 13%, and the company expects to achieve a market share of 50% by the end of FY12/24 [3][4]. - The company anticipates year-on-year growth in sales and operating profit for the second half of the fiscal year [4]. Financial Performance - Q2 operating profit was ¥3.1 billion, a 0.6% increase year-on-year, surpassing forecasts by 7% and consensus by 10% [2]. - Full-year guidance remains unchanged, with expectations of ¥3.2 billion in sales and ¥1.9 billion in operating profit for H2 [4]. - The revenue forecast for FY12/24 is ¥101.2 billion, reflecting a 6.9% year-on-year increase [7]. Market Strategy - The company has increased its advertising and sales promotion expenditures, particularly on e-commerce platforms like Douyin and Redbook, to support sales growth [3][5]. - A new product pipeline for H2 includes childcare appliances in Japan and nursing bottles for older users in China, which are expected to enhance sales [3]. Investor Sentiment - The market reaction to the recovery in the China market share is expected to be positive, with anticipated revenue growth supporting profit growth from FY12/25 [5].