The Must Read PSA Weekly Research Round-up (week to 26 Apr)

REPORTS: TDK (6762 JT) – Shares Recovering After a Large Correction / MACRO/MARKET: China’s liquidity boom / INDUSTRY INSIGHTS: The graphite electrode plays are under pressure / Housing tax update in our Daiwa House comment / PREVIEWS/RESULTS: Nidec’s forecasts are well short of expectations / Murata sees earnings decline / NEC guidance is positive / Canon’s results are as dull / A bleak outlook from Fanuc / Punchy FY19 Q1 from Chugai / Both Nissan and Suzuki cut their FY18 targets / Denso disappoints / ZOZO’s outlook is dim / A bumper year for Obic / M3’s outlook sits at the low end of consensus estimates / NRI beats FY18 targets and gives a lacklustre mid-term plan / Weak outlook from Docomo / COMPANY INSIGHTS: Nintendo gave conservative FY19 guidance but the tie-up with Tencent to distribute Super Mario in China was positive news / Rohm buys Panasonic’s diodes business / A strong Q1 from Huawei is good for TDK / TSMC says the worst is over / Another set of strong monthly figures from Cybozu / MUFG’s large IT write down takes TIS shares down too

The Weekly Comment by Pelham Smithers

Japan’s Stock Market Looks to be in “MonkaS” territory
MonkaS: Defined as being in a nervous, embarrassed or high-pressure situation. Pronounced Monka Ess. Emoticon has Pepe the Frog sweating profusely. MonkaS sees meme culture and Twitch culture collide, as Pepe, a well-known emoticon meme, is known as Monka on Twitch due to being linked to a subscriber to Nymn’s channel called MonkaSenpai.
This question probably elicits three types of response. There will be a group that can immediately identify whether we are in a A,B, C or whatever wave; there will be a group that huffs and puffs at the impudence of a question that implies there is any predictive information in a stock chart; while there will be a third that either mentally or verbally says, it looks worrying – or (MonkaS), to use the appropriate Twitch emoticon.

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

1. TDK (6762 JT) – Shares Recovering After a Large Correction

Company / Sector / Thematic Comments at a Glance

Technology: Consumer Electronics / Gaming

1. Tencent Okayed to Distribute Nintendo’s (7974 JT) Super Mario in China
2. Nintendo (7974 JT) Beats, but Guidance is Very Low
3. Sony (6758 JT) Guidance Down, but Higher than Our Forecasts
4. Akatsuki Inc (3932 JT) Delivers Strong Earnings Hint for SQE (9684 JT)

Technology: Industrial Electronics / SPE / Components / Precision

5. NEC (6701 JT) Guidance Starts to Reflect What the Company is Capable Of
6. Murata (6981 JT) Sees Earnings Decline
7. Canon (7751 JT) 1Q / FY19 Revision as Telegraphed by Nikkei
8. Nidec (6594 JT) FY19 Forecasts Well Short of Expectations
9. Rohm (6963 JT) Acquires Panasonic’s (6752 JT) Diodes Business
10. SPE Capex Plays’ Results

Chemicals / Basic Materials / Electronic Materials

11. Hitachi Chemical (4217 JT) Shares Bid Higher Again
12. JSR (4185 JT): FY18 Earnings Disappoint and FY19 Forecasts are Uninspiring
13. Huawei’s Strong Q1 is Good for TDK (6762 JT)
14. TSMC (2330 TT) Says Worst is Over
15. Daiwa House Revision (1925 JT); Housing Tax Update
16. Graphite Electrode Shares Fall

Auto

17. Suzuki (7269 JT) Lowers FY18 Forecast
18. Nissan (7201 JT) Lowers FY18 Earnings Forecast
19. Hino Motors (7205 JT) Cautious on FY19 Outlook

Auto Parts / Machinery

20. Fanuc FY18 (6954 JT) OP and Capex Above Consensus; Bleak FY19 Forecasts
21. Denso (6902 JT) Falls Short for FY18
22. Koito’s (7276 JT) Guidance Disappoints
23. Daikin (6367 JT) Up on Fujitsu General’s Guidance (6755 JT)
24. Nabtesco (6268 JT) FY19 Q1 Slightly Positive

Internet / eCommerce

25. ZOZO (3092 JT) Collapsed on Dim Outlook7
26. CyberAgent’s (4751 JT) Earnings Beat

Enterprise Software

27. Cybozu (4776 JT) Maintains Strong OP and Sales Growth in Q1
28. Another Bumper Year for Obic (4684 JT)
29. NRI (4307 JT) FY18 Beat; Doubles Down on Digital Transformation Focus
30. M3 (2413 JT) Reefs the Sails with its FY19 Forecasts

Telecom

31. Nikkei Suggests a Weaker FY19 for NTT Docomo (9437)

Pharmaceuticals

32. Chugai Pharma (4519 JT) Delivers Punchy 1Q OP

Miscellaneous

33. MUFG (8306 JT) Incurs a Large IT Writedown – TIS (3626 JT) Sold Down

Macro / Market

34. March Industrial Production / Retail sales / Tokyo CPI
35. China’s 1Q 2019 Liquidity Boom

PSA Company Visits, Tours and Interviews

• Attended earnings meeting at: JSR (4185 JT), Sekisui Chemical (4204 JT), Dexerials (4980 JT), Hitachi Chemical (4217 JT), Shin-Etsu Chemical (4063 JT), Zeon Corp (4205 JT), Tokuyama (4043 JT), TDK (6762 JT), Nitto Denko (6988 JT), CyberAgent (4751 JT), Monex (8698 JT), Fanuc (6954 JT), Komatsu (6301 JT)
• Contacted / Interviewed: TIS Inc (3626 JT)
• Participated in earnings calls of: LINE (3938 JT), Yahoo Japan (4689 JT), ZOZO (3092 JT), Nabtesco (6268 JT)

PSA in the Press

Pelham Smithers on specs for Sony’s (6758 JT) PS5: What do PS5 specs tell us about the future of Playstation versus Xbox? [WIRED UK, 20th April 2019]

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