The Must Read PSA Weekly Research Round-up (week to 02 Feb)

Highlighting Impressive Earnings at Sony, Honda, Shin-Etsu Chem, Fanuc, Canon, JSR, HCM and SBI Holdings / A 52-page Global Auto Sector Outlook for 2018

The Weekly Comment by Pelham Smithers

During January, Topix gained 1.1% to 1,836, which is only shabby in light of (1) the performance of equities globally that month and (2) the performance of the market after the first two days of trading, after which Topix had closed at 1,880. Annualized it is a 14% return. Adding in 2% dividends and removing 1% inflation, that is some way ahead of the 6~7% total real return equities are supposed to deliver. This of course was the story in 2017. While the Japanese stock market did fine (Topix gained 20%), if you ran an Asia-Pac fund you still needed to underweight Japan. Essentially 2% real growth plus 1% inflation = 3% top line growth; enough to power “winners” but not enough to drive the market as a whole. Furthermore, what growth there was generally came in the export and capital goods sectors, so you had a narrow but clearly defined group of winners.

Reports / Flash Notes Published This Week: Headlines at a Glance

1. Global Auto Sector Outlook for 2018
2. Shin-Etsu Chemical (4063 JP) FY17 Q3 Results: Strength Across All Segments
3. Fanuc (6954 JP) FY17 Q3 Results: Raising our FY17 and FY18 Estimates

Company / Sector / Thematic Comments at a Glance

1. Sony’s Embarrassment of Riches
2. Crypto Stocks Hurdle the Theft Trap
3. SBI Holdings Results and More – The Floral Decoration that Goes on the Icing that Goes on the Cake
4. Canon Delivers Punchy FY18 Forecasts
5. Capcom’s FYQ3 Results / FY18 Forecasts; Chance to Showcase its eSports IP at Japan’s First eSport Tournament
6. Murata: A Chance to Beat Full Year Estimates
7. Fujifilm (4901 JP) to Merge Xerox
8. Hitachi Chemical Warrants a Look after Lagging
9. JSR’s Strong Q3 Puts It Well Ahead of Guidance, and Consensus
10. Zeon Corp Provides an Upbeat Explanation
11. Dexerials Achieves 99% of its FY17 OP Guidance
12. Konica Minolta Quarterly Announcement Disappoints, Again
13. Honda Reports Excellent Q3 Results
14. Update on Mazda’s Skyactiv X
15. Monkey Issue Accelerating Diesel’s Downfall?
16. Car Navigation-Plays, Alpine and Clarion, Rise Despite Markedly Different Q3 Results
17. Koito Sold Off on Weak NA Sales
18. Fanuc Reports a Strong FY17 Q3
19. IHI is Engine Driven, but Risks Persist Elsewhere
20. Mitsubishi Electric Reports Strong FY17 Q3 Earnings Across the Board
21. HCM Reports FY17 Q3 OP Rise of 4.7x
22. Denso and Aisin: Narrowing the Spread
23. Rakuten to Buy Asahi Fire & Marine Insurance
24. Start Today: “ZOZO” Saves the Day as Results Fail to Impress
25. LINE: Going in All Directions
26. Nihon M&A Reports Impressive FY17 Q3 Earnings

List of PSA Published Reports Since Q3 2017 to Date

PSA Company Visits, Tours and Interviews

• Attended the results meeting for Sekisui Chemical (4204 JP), Zeon Corp (4205 JP), TDK (6762 JP), Konica Minolta (4902), Mitsubishi Electric (6503 JP), istyle (3660)
• Participated in the earnings conference calls of JSR (4185 JP), Dexerials (4980 JP), Hitachi Chemical (4217 JP), Nitto Denko (6988 JP), Tosoh (4042 JP), Mitsui Chemicals (4183 JP), Ube Industries (4208 JP), Denso (6902 JP), Aisin Seiki (7259 JP), LINE (3938), Start Today (3092)
• Logged onto the earnings webcast with Yahoo Japan (4689)
• Visited TDK (6762 JP), JSR (4185 JP)

*If you would like access to the full reports, please call your PSA sales representative. If you would like to see the list of reports produced YTD, please ask you can also find PSA research on FactSet, Thomson Reuters (Reuters Knowledge, Thomson One Analytics, Starmine), Capital IQ, and Bloomberg (under PSAZ or by typing in the < stock code> equity CN PSA ), or contact your sales representative.