Sanrio Company (T.8136)

A Japanese compounder with a world-class IP, fast growing revenue and 70% margins has recently crashed 46% and halved its multiple despite strong fundamentals.

Intro

Sanrio Company is the owner of the Hello Kitty and over 450 other characters’ Intellectual Property (IP). The company designs and licenses its IP, which is mostly kawaii (“cute” in Japanese) 2D characters, to other companies. They make money from licensing, operating their own retail omni-channel flagship stores and theme parks, but also from various digital entertainment content like education, videos, games, shows, Virtual Reality (VR) theme parks and User-Generated Experience (UGX) platforms.

The gross of the revenue comes from licensing, which, in FY 2025, was 55% of the total number. The product sales, which are mostly Sanrio’s retail and ecommerce stores, were 34%, and the theme parks were 9%. The other businesses classified under “new projects” include the digital and education businesses, and were 2%, but also the fastest growing.

The company’s shares have recently crashed 36% since November 2025 and 45% from their all-time-high of 8,643 JPY, and now fluctuate around 4,700 JPY. In my view, Mr Market has finally discounted them to well enough below their intrinsic value, offering at least a 30% margin of safety. In this analysis, I am going to explain why the shares have fallen despite sound fundamentals and dive deeply into Sanrio’s business model, strategy, IP, moats and valuation.

Sanrio IP