The Must Read PSA Weekly Research Round-up (week to 01 Jun)

The PSA Must Read Weekly Research Round-Up: Reports published this week on Nissan (7201 JP) / Square Enix (9684 JP) / Pelham Smithers looks at the Video Gaming market and what it means for Bandai Namco (7832 JP), Klab (3656 JP) and Sega Sammy (6460 JP) / Julie Boote looks at how the strong yen and tariff talks could affect the automobile market

The Weekly Comment by Pelham Smithers

The Italian political crisis has added the Euro to the list of troubled currencies. While the chances of the Euro suffering a similar run to that seen with the Turkish Lira or Argentine Peso are slight, any weakness poses a problem for the Japanese stock market. This is because although Japan Inc’s largest gross exposure is to the dollar, the euro represents its largest net exposure. Unlike with the dollar, Japanese manufacturers don’t have much in the way of euro input costs, so euro weakness represents outright financial hardship. Therefore, Japanese manufacturers have to either raise prices, or else operate on thinner margins. As Europe’s economies are only marginally less fragile than their politics, the first isn’t really an option.
Traditionally, most exposed to the euro are camera makers and video game companies. Nintendo’s (7974 JP) approximately €1bil in Euro deposits means its quarterly non-operating performance is as vulnerable as its operating performance; and with non-operating performance under the microscope because of Pokémon, that is a problem. For camera makers Canon (7751 JP) and Nikon (7731 JP), struggling with a renewed collapse in compact camera sales, this could have been better timed. One silver lining here is that the weak Euro should encourage Chinese tourism, which represents a significant component of local camera sales……..

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

1. Will Nissan (7201 JP) Surprise on the Upside in FY2018?

Company / Sector / Thematic Comments at a Glance

Technology: Consumer Electronics, Gaming

1. Where Now for Bandai Namco (7832 JP)?
2. Sega Sammy (6460 JP) Targeting Yokohama Casino
3. PSA Sniffs the Air at KLab (3656 JP)

Technology: Electronic Components and Precision

4. Canon (7751 JP) Visit Feedback: Not Increasing OLED Depot Capacity


5. Ube’s (4208 JP) Shares Resilient on Cautious Guidance
6. Japan Display (6740 JP) Weakness on OLEDs Appears Overdone
7. Maxell (6810 JP) Outlines a Thoughtful Business Plan
8. 300mm Wafer Additions May Avert Large Shortages


9. Auto Sector Hurt by Political Uncertainty; Production Numbers Improve
10. Suzuki (7269 JP), Toyota (7203 JP) Extend Co-operation
11. Nissan Cuts North America Production
12. Global EV Fleet Set to Expand
13. SoftBank (9984 JP) Invests in GM’s Self-Driving Business

Auto Parts / Machinery

14. A Sensible EV Component Move by Toyota (7203 JP) and Denso (6902 JP)
15. Upbeat Guidance from TEL (8035 JP) a Positive for SMC (6273 JP)


16. First Thoughts on KDDi (9433 JP) Visit
17. IIJ (3774 JP), Rakuten (4755 JP) and the Battle of the MNVOs

PSA Company Visits, Tours and Interviews

• Visited TDK (6762 JP), Sega Sammy Holdings (6460 JP), Chugai Pharmaceutical (4519 JP), KLab (3656 JP), TIS (3626 JP), KDDi (9433 JP), Canon (7751 JP), Nitto Denko (6988 JP), Comsys Holdings (1721 JP), Nexon (3659 JP), IIJ (3774 JP), Universal Entertainment (6425 JP), Ube Industries (4208 JP), Hoya (7741 JP)
• Attended earnings meetings at Soken Chemical (4972 JP), Sinfonia (6507 JP), Kyoritsu Maintenance (9616 JP)
• Attended information meeting at Asahi Kasei (3407 JP), Maxell (6810 JP), Mitsui Chemicals (4183 JP), Sumitomo Chemical (4005 JP), Mitsubishi Chemical Holdings (4188 JP)
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