The Must Read PSA Weekly Research Round-Up (Week to 25 Aug)

Reports Published – Have We Passed Peak FANG? / CyberAgent (4751) FY19 Earnings Turning Point

The Weekly Comment by Pelham Smithers

A bit of light has been shone into the crepuscular world of Japanese inflation…

Reports / Flash Notes Published This Week: Headlines at a Glance (full reports available upon request)

1. Global Technology / Software / Internet: Have We Passed Peak FANG?
2. Internet: CyberAgent (4751) – FY19 Earnings Turning Point

Company / Sector / Thematic Comments at a Glance (for more details, please contact our sales team)

Technology: Consumer Electronics / Gaming / Industrial Electronics / Precision / Electronic Components

1. Sony (6758): HTC Cuts price of Vive VR Headset – Implications for the PSVR
2. Square Enix (9684) and Sony (6758) to Tie-up on Smartphone Games
3. Nintendo (7974): Strong Splatoon 2 Sales / Switch Update/ SNESCE Launch
4. Toshiba (6502): State of Play with the Sale of the Memory Business
5. MHI (7011) Sends Hitachi (6501) an Arbitration Request


6. Hi-tech (EV / LiB) Materials Firm

Auto Parts / Machinery

7. Yaskawa Electric (6506): China Plant Tour / Fanuc (6954): No China Production, Not a Problem Yet
8. Automation Plays Continue to Hit New Listing Highs: Keyence, SMC, Nabtesco, Daifuku
9. Ferrotec (6890) Rights / Warrant Overhang Easing
10. 22-days of Rain in Japan: Daikin (6367) and Mitsubishi Electric (6503) Likely to See a Better Q2
11. Pioneer (6773): Update on Bendable OLED


12. Is Xilinx SoftBank’s (9984) Next Target?

Media / Internet

13. Negative Readthrough from WPP’s Outlook a Warning for Japanese Advertisers, Global Tech


14. Chugai (4519): Emicizumab Gets PDUFA Data
15. Cyberdyne (7779): Still Awaiting Turning Point

Miscellaneous / Macro

16. Is Japan’s CPI Calculation Erroneous?

PSA Company Visits, Tours and Interviews

• Calls with Pioneer (6773), GS Yuasa (6674), Cyberdyne (7599)
• Visited Mitsubishi Electric (6503), Fujifilm Holdings (4901), Showa Denko (4004), Toray (3402), Sumco (3436), Shin-Etsu Chemical (4063), Ube Industries (4208), Tokyo Ohka Kogyo (4186), Nissan Chemical (4021), Kuraray (3405)
• Small meeting: Sumitomo Chemical (4005)

PSA in the Media

• Our autos analyst Julie Boote is on the front page of MoneyWeek with her 3-page article on electric cars

List of PSA Published Reports Since Q2 2017 to Date

Summary of Reports / Notes Published This Week

1. Global Technology: Have We Passed Peak FANG?
Analyst Pelham Smithers looks at the FANG names and discusses what is in the price, and who the winners and losers might be next.
2. Internet: CyberAgent (4751) – FY19 Earnings Turning Point
CyberAgent’s share price has fallen over 14% since peaking at ¥4,075 on May 30th, 2017, in the wake of criticism by analysts regarding progress made with monetising the Internet TV station service, AbemaTV. The July 27th earnings release, when the company reported lower than expected profits due to the weak performance of the Game Business, made matters worse. Since analyst Thao Nguyen’s upbeat Nov 30th, 2016 report, “CyberAgent (4751): Backing its Bets by Doubling Up on AbemaTV Investment”, the stock performed well, rising 46% to the May 30th high, before falling back due to factors mentioned above. While we still like the company and have confidence in its strong market positioning in the smartphone advertising and game businesses, as well as in the potential of AbemaTV, valuations are now unappealing. We are wary that the amount of investment likely needed to help AbemaTV get closer to the monetisation stage will weigh on earnings in FY17 and FY18. We think these considerations will dampen interest in the shares until signs of improvement at the bottom line are evident.

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