The Must Read PSA Weekly Research Round-up (week to 07 Dec)
REPORTS OUT THIS WEEK: US Auto Sales for Nov 2018 / Mixi (2121 JT) – Time for a Revisit / Panasonic (6752 JT) – Can it Prove the Market Wrong? / BIG PICTURE INSIGHTS: We look at the market reaction to Japanese Corporate Earnings / Its corporate crunch time for Alps (6770 JT) and Alpine (6816 JT) / Implications for smartphone supply chain as stocks tumble on the news of the arrest of Huawei’s CEO / Gaming hardware wars: Xbox Scarlett vs PS5 / COMPANY INSIGHTS: The outlook for unit sales of the Nintendo Switch / Upside for the mobile business at Square Enix (9684 JT) / Evidence that things are looking up for Subaru (7270 JT); more inspection failures at Nissan (7201 JT) / Daikin’s (6367 JT) plans for A/C domination in India
The Weekly Comment by Pelham Smithers
Amid the economic and political fallout from the arrest of Huawei’s (pvt.) CFO in Vancouver, one stock hit a new high: NEC (6701 JT). Long seen as something of a basket case, the company suddenly finds itself a stock market favourite, as one of the few companies with the technology to replace Huawei, should the Chinese telco hardware company be completely locked out of communications markets worldwide. At this point, it isn’t clear what the fallout for Huawei is going to be. The US arrest is to do not with espionage but with suspected Iran sanctions breaches. This could simply prove expensive – as companies can be fined heavily for this – but it could also lead to market disbarment. Furthermore, we have been here before.
In 2016, Huawei’s Chinese rival, ZTE (000063 CH), agreed to plead guilty to selling components illegally to Iran, and paid nearly US$900mil, but was also banned from procuring from US suppliers for seven years. In Huawei’s case, the situation could be turned around with the firm being prevented from selling into the US for seven years. However, the arrest has additionally reminded everyone of Huawei’s supposed close links to the Chinese military, and of whether Huawei’s equipment deployed overseas can be used by China to spy on individuals / organizations in countries where the equipment was sold. It also hasn’t helped Huawei’s cause that the one country that had given Huawei’s equipment a clean bill of health – the UK – has recently revised its opinion in a negative way.
Reports / Flash Notes Published This Week: Headlines at a Glance
1. US Auto Sales for November 2018 – US Auto Market Stabilises
2. Panasonic (6752 JT) – Can it Prove the Market Wrong?
3. Mixi (2121 JT) – Time for a Revisit
Company / Sector / Thematic Comments at a Glance
Technology: Consumer Electronics / Gaming
1. Tokyo Market on Dec 6 Hit by Huawei Arrest
2. The Huawei Situation from a Japanese Viewpoint
3. Huawei to Debut Sony (6758 JT) 3D Technology
4. Hardware Battles: Xbox Scarlett vs PS5
5. Nintendo (7974 JT) Switch Debate Continues
6. Update on the Square Enix (9684 JT) Mobile Business
Chemicals / Materials
7. Mitsui Chemicals (4183 JT) and its Low Valuations
8. Mitsubishi Gas Chemical’s (4182 JT) Tough Saudi Negotiations
9. Nissan (7201 JT) Faces Further Vehicle Inspection Failures; Changes in EV Policies?
10. US Auto Market Stabilises in November
11. Things Are Looking Up for Subaru (7270 JT)
12. Toyota (7203 JT) Organises Rebirth
Auto Parts / Machinery
13. China Stocks and Automation Recover
14. A Look at Akebono Brake (7238 JT)
15. Hoshizaki (6465 JT): No Delay to Q3 as Investigation Completed with an All Clear
16. Daikin’s (6367 JT) India Domination Dream
17. KHI (7012 JT) and Sysmex (6869 JT) Develop Competitive Product to the Da Vinci Surgical Robot
Internet / eCommerce
18. Yahoo Japan’s (4689 JT) PayPay Climbs to No. 1 in the Download Charts
19. ZOZO (3092 JT) Launches ZOZOHEAT and ZOZOHEAT COTTON Product Lines
20. NTT Data (9613 JT) Paying Up for Top-Notch AI and IoT Engineers
21. Data Sharing and Fair Trade
22. Global Demand for Debugging Boosts OPMs at Poletowin Pitcrew (3657 JT)
23. China’s Tsinghua University Interested in Japan’s AI and Robotics Start-Ups
Macro / Miscellaneous / Strategy
24. Crunch Time for Alps (6770 JT) and Takeda (4502 JT) / The Result
25. Japanese Corporate Profits: Has the Data Been Misread?
PSA in the Press
Pelham Smithers is quoted in the FT (Dec 5) discussing trends in the gaming industry for hardware and software. https://www.ft.com/content/0a46b2ac-f70a-11e8-af46-2022a0b02a6c
PSA Company Visits, Tours and Interviews
1. Attended the earnings meeting for: Mamezou (3756 JT) and Kyoritsu Maintenance (9616 JT)
1. Interviewed / Conference Call with: Square Enix (9684 JT), GMO Internet (9449 JT), Daikin (6367 JT) and Daifuku (6383 JT)
2. Visited: Shin-Etsu Chemical (4063 JT), Nitto Denko (6988 JT), Japan Display (6740 JT), Zeon Corp (4205 JT) and Tokyo Ohka Kogyo (4186 JT)
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