Cosmos Pharmaceutical (3349)

Equity Research 13 October 2026 | 10:24PM JST

Cosmos Pharmaceutical (3349.T) Earnings Review: In line; pricing better than expected, personnel cost controls bear monitoring; Buy

3349.T 12m Price Target: ¥7,800 Price: ¥6,254 Upside: 24.7% BUY Sho Kawano Earnings summary: 1Q5/27 operating profits of ¥12.0 bn (+3.1% | Goldman Sachs Japan Co., Ltd. yoy), released after the October 13 close, were largely in line with Tomoko Imoto our estimate (¥12.1 bn) and guidance (¥12.3 bn). In order to cover a | Goldman Sachs Japan Co., Ltd. larger-than-expected increase in SG&A expenses (¥580 mn above budget) due to sales floor changes accompanying the strengthening Xiao Zhang | Goldman Sachs Japan Co., Ltd. of PB products and other factors, Cosmos revised its selling prices, enabling it to improve gross margin by 0.7 pp yoy to 21.7% as gross profits beat guidance by ¥0.3 bn. However, compounded by Key Data _____________________________________ Market cap: ¥495.6bn / $3.1bn unseasonable weather, sales (+5.2% yoy / same-store sales +0.7%) Enterprise value: ¥494.6bn / $3.1bn 3m ADTV: ¥2.8bn / $17.5mn missed guidance by ¥8.8 bn/3%. Japan Japan Retail/Restaurants Our view: While sluggish sales of seasonal products due to M&A Rank: 3 Leases incl. in net debt & EV?: No unseasonable weather were already known, the increase in GS Forecast __________________________________ personnel costs (+12.3% yoy, driven by an increase in working hours 5/26 5/27E 5/28E 5/29E

rather than headcount) exceeded our expectations, and it will be Revenue (¥ bn) Op. profit (¥ bn) New 1,099.6 42.4 1,165.0 44.0 1,247.0 46.5 1,325.0 49.1 important to monitor the company’s strategy of controlling this Op. profit (¥ bn) Old Op. profit CoE (¥ bn) 40.5 43.0 -- -- from 2Q onward. On the other hand, the fact that Cosmos set selling EPS (¥) New prices at a level that enabled it to secure profits and drive the 1Q EPS (¥) Old P/E (X) gross margin up to 21.7% was a surprise. While we recognize the P/B (X) 2.2 1.6 1.4 1.3

need to view the sales outlook more cautiously than before, our CROCI (%)

gross margin expectations have risen. 8/26 11/26E 2/27E 5/27E EPS (¥)

We upgraded Cosmos to Buy in December 2025 on the view that it GS Factor Profile ______________________________ was undervalued for a drugstore company with prospects for mid- Growth

to high-single-digit operating profit growth. Despite current issues Financial Returns

such as the company’s entry into the hotel business, we maintain our Multiple Buy rating as we still view the valuation level as attractive (trading on a FY5/27E P/E of 16X, based on our estimates). Integrated

Below, growth rates are yoy unless otherwise noted. Percentile 20th 40th 60th 80th 100th

3349.T relative to Japan Coverage 3349.T relative to Japan Retail/Restaurants Key points Current pricing level slightly higher than we expected, gross Source: Company data, Goldman Sachs Research estimates. See disclosures for details. margin in the mid-21% range looks to be within reach: After

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs Cosmos Pharmaceutical (3349.T)

Cosmos Pharmaceutical (3349.T) Income Statement (¥ bn) ___________________________________ BUY Rating since Dec 14, 2025 5/26 5/27E 5/28E 5/29E Total revenue 1,099.6 1,165.0 1,247.0 1,325.0 Cost of goods sold ( ,037.5) SG&A ( ) Ratios & Valuation __________________________________________ R&D -- -- -- -- 5/26 5/27E 5/28E 5/29E Other operating inc./(exp.) -- -- -- -- P/E (X) EBITDA P/B (X) 2.2 1.6 1.4 1.3 Depreciation & amortization ( ) FCF yield (%) ( EBIT EV/EBITDAR (X) 6.8 5.1 4.7 4.2 Net interest inc./(exp.) (0.5) (0.2) (0.2) (0.2) EV/EBITDA (excl. leases) (X) 9.6 7.2 6.6 5.9 Income/(loss) from associates…