CyberAgent: Initiating With a Narrow Moat and a Fair Value Estimate of JPY 1,000

We initiate coverage of CyberAgent, one of the top digital advertising agencies and mobile game publishers in Japan with our fair value estimate of JPY 1,000 and a narrow moat rating. CyberAgent also operates a media business which is currently not profitable, but we believe it has good synergies with the advertising and gaming segments. CyberAgent has built over 20 years of expertise and long-term relationships with platforms and clients in the digital advertising space. The firm’s game business has several long-running popular original IP games and also has a long history of developing mobile games based on popular IP owned by console game developers. Abema, an internet TV platform co-owned by CyberAgent and TV Asahi, provides advertising slots to CyberAgent’s digital advertising clients, as well as an outlet for tie-up animation featuring CyberAgent’s games IP. As such, we believe that no other advertising agency or game publisher can replicate all the capabilities and connections that CyberAgent has in all of the above areas, so we believe that the firm will remain one of the market leaders in the digital advertising as well as the game industry. We believe the stock is currently fairly valued.