DBS analyst Cheria Widjaja upgraded the rating on Kao (KAOCF – Research Report) to a Buy today, setting a price target of Yen7,100.00.
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Cheria Widjaja’s rating is based on Kao’s ongoing recovery and promising growth prospects. The company has demonstrated substantial sales growth across various regions, except in its Life Care segment, with particularly strong performances in Japan, Asia, the Americas, and Europe. Kao’s strategic reinvestment plans, focusing on high-growth areas such as Skin Care, Cosmetics, and Chemicals, are expected to drive further global expansion.
Widjaja also notes Kao’s structural reforms aimed at enhancing efficiency and profitability, such as improvements in human capital and cost structure. These reforms, along with Kao’s strategic price increases and productivity improvements, are anticipated to mitigate potential increases in raw material costs and currency fluctuations. Furthermore, the company’s Global Sharp Top Strategy under its K27 management plan targets a robust return on invested capital by FY27F, solidifying its medium-term growth trajectory. These factors contribute to the Buy rating, with a target price of JPY7,100.
In another report released on February 3, Jefferies also upgraded the stock to a Buy with a Yen7,000.00 price target.