Bandai Namco: Initiating Coverage With a Narrow Moat Rating and Fair Value Estimate of JPY 5,000

We initiate coverage of Bandai Namco, one of the top entertainment companies in Japan, with a narrow moat rating and fair value estimate of JPY 5,000 per share. Our narrow moat rating is based on Bandai Namco’s intangible assets arising from over 400 widely popular characters and intellectual properties, or IPs, that it has produced and distributed over the past few decades. In particular, its top three franchises—Gundam (1979), Dragon Ball (1984), and One Piece (1997) account for nearly 40% of total sales. We believe Bandai Namco will continue to generate returns above its cost of capital for at least the next decade through leveraging 1) its long track record as one of the top toy and game companies in Japan, 2) its long-term partnerships with Japanese entertainment companies, and 3) its unique ecosystem of games, merchandise, animation, and amusement facilities.