Sundrug（9989.JP）Q1 FY3/25 results： OP broadly in line with the company's plan

Investment Rating - The report assigns a 12-month rating of "Neutral" for Sundrug with a price target of ¥4,250 [3][17]. Core Insights - Sundrug's Q1 FY3/25 operating profit (OP) was ¥10.9 billion, reflecting a 10% year-over-year increase, which aligns with the company's plan and exceeds both the forecast of ¥10.5 billion and the IBES consensus of ¥10.6 billion [2]. - The drugstore segment's sales fell short of expectations, while the discount store segment outperformed due to cost efficiencies [2]. - The company anticipates starting product supply to Kirindo Holdings in the second half of FY3/25, which may impact future earnings [2]. Financial Metrics Summary - Revenues are projected to grow from ¥751.8 billion in FY3/24 to ¥802.7 billion in FY3/25, with further increases expected in subsequent years [4]. - EBIT is expected to rise from ¥41.0 billion in FY3/24 to ¥43.9 billion in FY3/25, indicating a stable profitability outlook [4]. - Net earnings are forecasted to increase from ¥29.1 billion in FY3/24 to ¥29.4 billion in FY3/25, with EPS projected to be ¥251.4 for FY3/25 [4]. - The forecasted price appreciation is 9.5%, with a dividend yield of 3.3%, leading to an expected total stock return of 12.9% [5]. Company Overview - Sundrug operates as a major drugstore chain in Japan, offering a range of products including prescription drugs, cosmetics, and food items, and also runs a discount store business under the name DIREX [6].