The Must Read PSA Weekly Research Round-up (week to 05 September)
Reports / Flash Notes Summaries
1. Gumi (3903 JT) Buys XRP as It Looks to Ripple for In-Game Transactions
SBI Holdings-backed video game developer Gumi announced it was buying ¥2.5bil [US$17mil] XRP as it looked to bring Ripple into the video game blockchain world. Pelham Smithers explains what is involved.
2. Isuzu Motors (7202 JT): Facing Challenges in FY25 and Beyond
After a solid post-Covid profit rebound, Isuzu is once again navigating through troubled water: Its pick-up truck sales in Thailand have collapsed, the US sales situation is uncertain, and commercial vehicle sales in Asia are stagnating. Isuzu expects sales volumes will recover, and earnings will continue to benefit from further price hikes. Analyst Julie Boote is examining the truck maker’s prospects in light of increasing competition and rising geopolitical and macro-economic uncertainties.
3. Japan’s Banking Industry Deepens Investment in DX
The most recent quarterly earnings for the system integrators highlighted the sustained increase in spending by Japanese financial institutions over recent quarters, as they seek to improve products and services amid a shift in interest rates and the introduction of tax-exempt investment accounts, and as interest in digital currencies grows. Analyst Lindsay Whipp reviews some of the DX spending undertaken by Japan’s banking industry and highlights beneficiaries.
Industry Insights
Video games round-up
Weak Japan auto sales
Japanese banking industry’s Investment in DX deepens
Macro / Market / Misc.
Latest MoF corporate survey shows strong software spending
Accounting issues at Chinese subsidiaries rear their head again
Real wages turn positive in July
Company Insights: News / Previews & Results
Capcom’s gripe about PS5 price
Does the PS6 need to be optimized?
Sony to bring out downgraded PS5 Slim for just Europe?
Switch 2 has another weak sales performance in Japan
Nidec shares plummets on further accounting irregularities / was it an overreaction?
UBE Corp’s faster petrochemical restructuring
Mazda announces reorganisation and AI transformation project
Daifuku hits new all-time-high
Ryobi and Japan’s “old school” brand revival”
Mercari Mobile new plans
Sansan survey provides insight into sales staff shortages at SMEs
Insource reports solid August KPIs
Intermestic buys Megane Super operator Visionary Holdings; starts new autumn ad campaign for SUNCUT Glasses with Ren Meguro
The Weekly Comment by Pelham Smithers
Monday [8 Sep] sees the LDP decide whether or not to bring forward an LDP Presidential election that would likely see Ishiba being ousted. Can Ishiba hang on, asks Pelham Smithers.
Company / Sector / Thematic Comments at a Glance
Technology: Consumer Electronics, Gaming
1. Video Games Round-up
2. Capcom Complains About PS5 Pricing
3. How Optimized Does the PS6 Need to Be?
4. Sony to Bring out Downgraded PS5 Slim Just for Europe?
5. Switch 2 Posts Another Weak Sales Performance in Japan
Technology: Industrial Electronics / Components / Semis & SPE / Precision
6. Nidec Shares Plummet on Further Accounting Irregularities / Was it an Overreaction?
7. Other News & Moves That Caught Our Eye
Chemicals / Materials
8. UBE Corp’s Faster Petrochemical Restructuring
9. Other News & Moves That Caught Our Eye
Autos / New Mobility
10. Autos Rise as 15% Tariff Agreed
11. August Japan Auto Sales Decline -8.3% YoY – the Largest Fall Since Dec 2024
12. Mazda Announces Reorganisation and AI Transformation Project
13. Other News & Moves That Caught Our Eye
Capital Goods / Machinery / Auto Parts
14. Daifuku Hits New Listing High
Internet / eCommerce
15. Mercari Mobile’s New Plans
Enterprise Software / IT Services
16. Latest MoF Corporate Survey Shows Strong Software Spending
17. Japan’s Banking Industry Deepens Investments in DX
18. Sansan Survey Provides Insight Into Sales Staff Shortages at SMEs
19. Other News & Moves That Caught Our Eye
Pharma / Healthcare
20. Parma News & Moves That Caught Our Eye
Small- / Mid-Cap Insights
21. Insource Reports Solid August KPIs
22. Intermestic Acquires Megane Super Operator Visionary Holdings / New Autumn Ad Campaign Launched
Macro / Market / Strategy / Misc.
23. Real Wages Turn Positive in July
24. Accounting Issues at Chinese Subsidiaries Rear Their Head Again
25. Ryobi and Japan’s “Old School” Brand Revival [Even Though it Isn’t Really a Japanese Brand Anymore]
26. Other News & Moves That Caught Our Eye
PSA in the Press
1. Market strategist Pelham Smithers features in the following Nikkei article:
Japanese stocks’ weaknesses are “small, rough, and timid” in the race to grab 10 trillion yen of US money – 29 August]
Excerpt: Pelham Smithers is concerned that “cautious targets will not only disappoint investors, but will also prevent the company from growing profits to the extent that it has potential.”
2. Pelham Smithers discusses the changes in the LDP and the impact on the yen
Japan LDP Secretary General Plan to Quit Hits Yen, Futures Fall – Bloomberg [2 Sep]
Excerpt: “You could argue that it might be a plus for equities. Ishiba can’t now simply hang on by hanging on, he’ll need to be proactive, which presumably means being fiscally aggressive.” “Yen weakness is possibly also a positive for stocks.”
Japan PM’s Power Broker Intends to Quit Over Election Setback– Bloomberg [2 Sep]
Excerpt: “Ishiba can’t now simply hang on by hanging on, he’ll need to be proactive, which presumably means being fiscally aggressive,” said Pelham Smithers, managing director of UK-based Japan equity research firm Pelham Smithers Associates.
3. Small- / mid-cap specialist Hiroyuki Terada’s features in the following article:
Intermestic: Intermestic Shares Soar on Plan to Acquire Another Eyewear Chain – Bloomberg [3 Sep].
Excerpt: The move “expands Zoff’s generational reach” as Megane Super mostly caters to older customers, whereas Zoff is targeted at younger ones”. Please see comment No22 below for more details.
4. PSA’s Autos / new Mobility analyst Julie Boote flags concerns on Mazda in the following Reuters article:
US tariffs still spell big pain for Japan’s small automakers | Reuters [5 Sep]
Excerpt: Seeking a boost within the US, Mazda is increasing production of its CX-50 crossover SUV at a plant it operates with Toyota in Alabama. It has lowered U.S.-bound shipments from Mexico to preserve margins and has cut incentives on these models, Chief Executive Masahiro Moro said last month. The Hiroshima-based automaker was likely hoping consumers would accept higher prices, said analyst Julie Boote at Pelham Smithers Associates. She expects Mazda to work more closely with Toyota – such as by teaming up to make vehicles in the U.S. and on procurement and distribution – with Toyota raising its roughly 5% stake in the company within the next two years.
PSA Company Visits, Tours and Interviews
Visited: Shin-Etsu Chemical (4063 JT), UBE Corp (4208 JT)
1:1 Call with: Insource (6200 JT), Intermestic (262A JT), Nidec (6594 JT)
Presentations at: TDK (6762 JT), Resonac (4004 JT), Toray (3402 JT)
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