The Must Read PSA Weekly Research Round-up (week to 03 July)
Reports / Flash Notes Summaries
1. 2026 Q3 Japan Stock Market Quarterly
After a stellar 2026 Q2, how should investors approach the Japanese stock market in Q3? In this report, strategist Pelham Smithers looks into whether the Nikkei 225 still offers value at 70,000 and, in particular, whether Japan’s AI stocks – both the aggressively bought up AI-inflected hardware names, and the almost equally aggressively sold off AI-inflected software names – do as well. The report also looks at opportunities and pitfalls in the auto and video game industry, and updates the reader with PSA’s latest Focus List of our favourite 33 Japanese stocks
2. Building SDVs – Can Japan Compete?
Software defined vehicles [SDVs] are not an optional upgrade but a structural reset of the auto industry. The shift, therefore, from hardware-based architecture to SDVs presents a challenge to legacy automakers. Japan’s OEMs seem to be a reluctant follower – they are lagging their global peers in achieving true software / hardware decoupling, zonal EE architecture and full-stack software control – but they now trying to adopt the software-first approach. Analyst Julie Boote reviews the current status of SDV development in Japan and assesses the chances of a successful implementation of the new software-centric auto development amid tough market conditions.
3. Timee (215A JT): FY26~FY29 OP to Grow at a CAGR of +35%
Timee is positioned to sustain strong earnings growth as its core Spot Work business continues to scale across its Logistics, Retail and Social Care segments, while the Food division is nearing a potential turning point. Over FY26~FY29, analyst Thao Nguyen is modelling for net sales and OP to grow at a CAGR of +24.8% and +35.0%, respectively, with the OPM expanding from 19.4% to 23.8%. While near-term investment in field managers, worker acquisition and non-spot work services is likely to weigh on margins, these initiatives are set to strengthen client penetration, improve fill rates and broaden Timee’s addressable market.
4. BayCurrent: (6532 JT) – AI Tailwind Not Headwind
Since hitting a low on 24 Feb, BayCurrent’s shares have recovered +63%. However, they are still down -2% YTD and -14% over 12-months, vs Topix’s respective +15% and +43% gains. This means the company is still trading on attractive EV/OP of 13.4x for FY26 and 10.7x for FY27 (PSAe). The consultancy firm is benefiting from AI adoption rather than becoming a victim of it and we think it is in a strong position to comfortably beat out its medium-term targets in FY28 thanks to strong underlying demand. We have included it in PSA’s CY26 Q3 Focus List.
Industry Insights
June SSD contract prices rise
New competition for T-glass?
Video game console sales struggle in May as price hikes continue to hurt
No future for Japan autos?
Macro / Market / Misc.
May Retail sales +5.3% YoY
May Industrial production -1.7% YoY
Q2 Tankan comes in at 22, up +5pts as AI impact accelerates
Business confidence remains high part 2
Company Insights: News / Previews & Results
Might Advantest beat expectations when it reports on 29 July?
Nintendo Star Fox game does better than previous versions at launch in UK; Star Fox tops Japan video game charts
Nintendo Star Fox game does better than previous versions at launch in UK
Flagging Shin-Etsu’s strengths in semi-use and functional materials
Rasa: 50% global share in high-purity phosphoric acid for semiconductor manufacturing
Osaka Organic Chemical revises its FY26 full-year &1H guidance up;
Honda to make Astemo subsidiary
Toyota to compensate suppliers for gigacasting delay
MHI and KHI get small boosts
Rakuten to receive ¥150bil in subsidies to develop low-Earth orbit satellite communications
Daiseki keeps FY26 guidance unchanged
Sansan: FY25 full-year preview
The Weekly Comment by Pelham Smithers
With semiconductor stocks having a wobble after the blowout Micron results, warnings of the boom-and-bust nature of the semiconductor cycle are widespread. The big question is therefore, why should this time be any different?
Company / Sector / Thematic Comments at a Glance
Technology: Consumer Electronics, Gaming
1. Video Game Console Sales Struggle in May as Price Hikes Continue to Hurt
2. Nintendo Star Fox Game Does Better than Previous Versions at UK Launch
3. Star Fox Tops Japan Video Game Charts
Technology: Industrial Electronics / Components / Semis & SPE / Precision
4. June SSD Contract Prices Rise
5. Might Advantest Beat Expectations When It Reports on 29 July?
Chemicals / Materials
6. New Competition for T-Glass?
7. Shin-Etsu: Competitive PVC Business, Strong Global Share in Key Materials
8. Rasa: 50% Global Share in High-Purity Phosphoric Acid For Semiconductor Manufacturing
9. Osaka Organic Chemical: Revises its FY26 Full-Year and 1H Guidance Up
Autos / New Mobility
10. No Future for Japan Autos?
11. Honda to Make Astemo Subsidiary
12. Toyota to Compensate Suppliers for Gigacasting Delay
Capital Goods / Machinery
13. MHI and KHI Get Small Boosts
Internet / eCommerce
14. Rakuten Gets ¥150bil in Subsidies to Develop low-Earth Orbit Satellite Communications
15. Daiseki Keeps FY26 Guidance Unchanged
Enterprise Software / IT Services
16. Sansan: FY25 Full-Year Preview
Miscellaneous / Market / Strategy / Macro
17. Retail Sales in May Rise +5.3% YoY
18. May Industrial Production -1.7% YoY
19. Q2 Tankan Comes in at 22, up +5pts as AI Impact Accelerates
20. Business Confidence Remains High Part 2
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