The Must Read PSA Weekly Research Round-up (week to 22 Nov)

REPORTS OUT THIS WEEK: Carlos Ghosn Arrested: Concern over future of alliance / Value Implosion in the Japanese Video game Sector / Daifuku (6383 JT) Order Visibility Play / ZOZO (3092 JT) Product Review BIG PICTURE INSIGHTS: China machine tool association officials saying recovery 6-24 months could be weighing on automation stocks / The valuation of gaming stocks have pulled back to levels that suggest they are priced for failure / COMPANY INSIGHTS: We have positive feedback after our visit to Harmonic Drive (6324 JT)

The Weekly Comment by Joel Scheiman

Tokyo took its lead from US markets day by day this week. The Nikkei Index closed up on Monday, which reflected the advance by Wall Street the previous Friday. When US markets reopened however, investors took note of the discord between US Vice President Mike Pence and Chinese President Xi Jinping at the Asia Pacific Economic Co-operation summit, which reignited fears of an extended trade war. Reports suggested that the US intended to use the summit to gain support to overhaul the World Trade Organization (WTO) and its rules, something which China could hardly condone. By midweek the US Dow and S&P Indexes had erased their gains for the year and slid into negative territory, while risk perception this time focused on an economic slowdown as opposed to rising US interest rates.

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

1. Carlos Ghosn Arrested – Concern Over Future of Alliance. Implications for Nissan (7201 JT) and MMC (7211 JT)
2. Nissan and The Future of the Alliance / Nissan: How to Rebalance the Capital Structure without Putting off Investors
3. Value Implosion in the Japanese Video Game Sector
4. Daifuku (6383 JT) Order Visibility Play
5. ZOZO Product Review – ZOZO Jeans and T-shirt Review

Company / Sector / Thematic Comments at a Glance

Technology: Consumer Electronics / Gaming / Electronic Components

1. Nexon(3659 JT) in China
2. Value Implosion in the Japanese Video Game Sector
3. Positive Feedback from our Visit to Harmonic Drive Systems (6324 JT)

Chemicals / Materials

4. Fujimi (5384 JT): FY18 Guidance Looks Conservative
5. Hoya’s (7741 JT) Strategy to Expand Intraocular Lens Sales
6. Sumitomo Metal Mining (5713 JT): Focus on Nickel

Autos

7. Breaking News for Nissan (7201 JT) – the Carlos Ghosn Scandal
8. Volkswagen (VOW GR) Announces Major Investment into Electric Vehicles
9. Subaru (7270 JT) Introduces Crosstrek Plug-in Hybrid, New Forester

Auto Parts / Machinery

10. Fanuc (6954 JT) President Suggests China Capex Recovery at Least 6-Months, Maybe 1~2 Years Away”
11. Commodities Weakness Good for Daikin (6367 JT)

Internet /eCommerce

12. GungHo (3765 JT) Rises for the First Time This Week Amid a Sector Recovery
13. CyberAgent (4751 JT) to Broadcast Another Special Reality Program
14. ZOZO (3092 JT) to Sponsor PGA TOUR

PSA in the Press

Autos analyst Julie Boote is in high demand with interviews with the Wall Street Journal, Bloomberg TV and Sky News with Ian King regarding the arrest of Carlos Ghosn and the implications for the alliance.
https://www.wsj.com/articles/analysis-ghosns-departure-would-leave-vacuum-at-worlds-largest-auto-alliance-1542634804?mod=hp_major_pos14
https://www.bloomberg.com/news/videos/2018-11-20/-bloomberg-daybreak-americas-full-show-11-20-2018-video (clip on 29th minute)
https://news.sky.com/video/ghosn-a-charismatic-and-controversial-figure-11558995

PSA Company Visits, Tours and Interviews

• Attended earnings meeting at Kanto Denka (4047 JT)
• Attended information meeting at Sumitomo Chemical (4005 JT)
• Interviewed / Conference Call with Daifuku (6383 JT), Ichikoh (7244 JT), TIS Inc (3626 JT), PKSHA Technology (3993 JT)
• Visited Harmonic Drive Systems (6324 JT), Nexon (3659 JT), RIZAP Group (2928 JT), Otsuka Holdings (4578 JT), Hoya (7741 JT), TDK (6762 JT), Fujifilm Holdings (4901 JT)

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