Update shared on 18 May 2026
Fair value Decreased 16%(Fair Value adjusted to 13%, matching in-line with company Net Revenue forecast and accounting for a conservative outlook due to current headwinds.)
Multi-model Intrinsic Value estimates:
- EPV: ¥1291
- EV/EBITDA (Relative): ¥1480
- P/E (Relative): ¥1150
- DCF - EBITDA Exit: ¥2280
- DCF - Growth Exit: ¥3640
Major headwinds:
- Rebounding by salvaging applicable technology from HoloEarth
- Reallocation of resources, staff or evaluation of necessary workforce reduction
- SG&A Continues to grow as management believes more talent managers and support staff or needed to make their talent more productive.
- Several new labor laws and standards came into effect in 2026 directly affecting Entrusted Business Operators (AKA the talent/VTubers) - These laws require companies be in compliance and in some cases, significantly their signed agreements which can significantly affect future terms and agreements made with the company.
- Company's Operating profit is expected to decrease annually by -0.7 to -0.8% in FY27
- Negative impact of losing several popular talent over the past year negatively impacted streaming revenue and merchandise sales.
- Continued pressure to insert itself in the US market stateside continues to enhance ongoing expenses with no signal of payoff in revenue.
Major tailwinds:
- One time write downs on retired assets, winding down of unprofitable projects brings renewed doubt of transparency, trust and longevity in the business model when compared to competition.
- PE Ratio continues to trade at a premium price when compared to more successful peers.
- Company has spent over a year stating they intend to improving services and costs through the "optimization of Supply Chain Management (SCM)" despite outsourcing to Transcosmos.
- Streaming remains their source of strength and reach to fans regardless of region. A refocus on this, if combined with the right resources or reusing existing infrastructure could deliver "top tier" content at a premium.
- "Expanding Brand Touchpoints through Diversification" - While their TCG is certainly a seller, the ability to have and use existing technology at their disposal continues to provide Cover with missed opportunities to capitalize that could be explored through anime manga and light novels.
Closing: Current main narrative sans "Fair Value" and forecasts stands. Windwinds and tailwinds will define Cover Corporation's FY2027 future by November if cyclical nature continues to hold. A strong Q3 and Q4 must build upon what the first half accomplishes.
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