Report

PSA Strategy: Japan Stock Market Quarterly for 2025 Q4

For almost three years the Nikkei 225 has been tracking its performance from the 2003~5 bull market, albeit at levels some 3.3x higher In this report, Pelham Smithers discusses the similarities and asks three key questions: (1) Can we continue to track 2005 through the rest of the year; (2) Whatever happens in Q4, should we fear or be hopeful for 2026? And (3) Who are the upcoming winners and losers.
Underlyings
Advantest Corp.

Advantest and its consolidated subsidiaries manufacture and sell semiconductor and component test system products and mechatronics-related products such as test handlers and device interfaces. Co. also engages in research and development activities and provides maintenance and support services associated with these products. Co.'s principal business segments are semiconductor and component test system; mechatronics system; and services, support and others. Product lines include test systems for memory semiconductors and non-memory semiconductors; test handlers, mechatronic-applied products, and for handling semiconductor devices.

ASTREE CIE ASSURANCE & REASSURANCE

Canon Inc.

Canon and its subsidiaries are engaged in the manufacture and sale of office multifunction devices, plain paper copying machines, laser printers, inkjet printers, cameras and lithography equipment. Co. sells its products principally under the Canon brand name and through sales subsidiaries. Each of these subsidiaries is responsible for marketing and distribution to retail dealers in an assigned territory. As of Dec. 31, 2017, Co.'s manufacturing is conducted primarily at 30 plants in Japan and 18 plants overseas. Co. operates its business in four segments: Office Business Unit, Imaging System Business Unit, Medical System Business Unit, and Industry and Others Business Unit.

Casio Computer Co. Ltd.

Casio Computer is mainly engaged in the development, manufacture and sale of consumer electronics. Along with its affiliates, Co. operates in three business segments. The Consumer segment is engaged in the manufacture and sale of watches, clocks, electronic dictionaries, electronic calculators, label printers, electronic musical instruments and digital cameras. Co.'s watch brands include "G-SHOCK," "BABY-G," "PRO TREK," "EDIFICE," "OCEANUS, " "SHEEN," "PHYS," "wave ceptor" and "LINEAGE." The System equipment segment provides handy terminals, electronic cash registers including POSs, office computers, page printers and data projectors. The Other segment manufactures molds and other products.

Chugai Pharmaceutical Co. Ltd.

Chugai Pharmaceutical is a pharmaceutical company. Along with its subsidiaries, Co. is engaged in the research and development of new prescription medicines and the subsequent manufacturing, marketing and distribution activities. Co. sells its pharmaceutical products to the nationwide appointed stores in Japan, as well as in overseas, such as Germany, the U.K., France, Taiwan, China, South Korea and the U.S. Co., through its subsidiaries, is also involved in the management of research facilities, and the research on drug discovery, as well as the provision of literature research services for pharmaceutical information, and pharmaceutical academic information.

Citizen Watch Co Ltd.

Citizen Watch is a holding company. Co. through its affiliates, is mainly engaged in the manufacture and sale of watches, machine tools and electronic devices. The Watches segment manufactures analog/digital watches and clocks. Co.'s watch brands include "The CITIZEN," "Eco-Drive One," "PROMASTER" and other. The Machine Tools segment offers CNC automatic lathes, machining cells and cutting machines. The Devices and Components segment offers automotive components, LED lighting chips, quartz crystal blanks and crystal device components. The Electronic Products segment provides digital thermometers, digital photo printers and thermal label printers. In addition, Co. sells jewelry products.

Cover Corporation (5253 JT)

CyberAgent Inc.

CyberAgent is an information technology company. Media segment is engaged in the operation of internet TV station "AbemaTV," free live streaming programs without subscription "FRESH!," blog service "Ameba," matching services "Tapple" and music streaming service "AWA." Game segment offers a variety of games for smartphones such as "GRANBLUE FANTASY." Internet Advertisement segment is engaged in the provision of internet advertising agency services. Investment Development is engaged in the corporate venture capital business, as well as the establishment and operation of investment fund. Others segment is engaged in the operation of smartphone media.

Densan System Co Ltd (3630 JT)

Fuji Media Holdings Inc.

Fuji Media Holdings is a holding company engaged in the television broadcasting. Broadcasting segment is engaged in the television and radio broadcasting. Production segment is engaged in the planning, production and sale of television programs, movies and other video contents. Video and Music segment distributes DVDs and CDs. Life Information segment is engaged in the mail-order marketing business. Advertising segment operates advertising agencies and produces advertisements. Urban Development segment is engaged in the leasing and management of office buildings, the real estate development, and the operation of hotels and leisure facilities.

Fujikura Ltd

Fujikura is mainly engaged in the manufacture, sale and installation of telecommunication cable, electric cable and electronic materials. Along with its affiliates, Co. operates in four business segments: power & telecommunication systems, electronics business, automotive products and real estate. Co.'s principal products include power cables, telecommunication cables, aluminum wires, enameled wires, optical fibers, optical fiber cables, telecommunication and optical components, fiber optic equipment, network equipment, flexible printed circuits, electronic wiring, HDD components, connectors, automotive wire harnesses, and others. Co. is also engaged in the leasing of real estate.

Honda Motor Co. Ltd.

Honda Motor is the parent company of a group mainly develop, manufacture and distribute motorcycles, automobiles, power products, and also provide financing for the sale of those products. Principal manufacturing facilities are located in Japan, the United States of America, Canada, Mexico, the United Kingdom, Turkey, China, India, Indonesia, Malaysia, Thailand, Vietnam, Argentina, and Brazil. Co.'s principal business segments are motorcycles, automobiles, financial services, and power products & other business. Co.'s principal automobile products include passenger cars such as "Legend," "Accord," "Inspire," "Civic," "Insight," "City," "Acura RL," "Acura TL," "Acura TSX," and "Acura CSX".

Internet Initiative Japan

Internet Initiative Japan is engaged in the provision of a comprehensive range of Internet connectivity services, WAN services, outsourcing services, systems integration and equipment sales to Co.'s customers mainly in Japan. Co.'s principal services are full-spec IP service, closed-network services, security-related outsourcing services, web server hosting and e-mail security service, as well as systems construction and systems operation and maintenance. Co., through its subsidiary, is engaged in the operation of ATMs and its network systems and receives a commission for each bank withdrawal transaction when a customer uses its serviced ATMs. As of March 31, 2018, Co. has 1,096 ATMs.

Isuzu Motors Limited

Isuzu Motors is engaged in the manufacture and sale of automobiles. Co. manufactures heavy/medium/light-duty trucks, buses, passenger vehicle engines and industrial-use diesel engines. Co.'s principal products include commercial vehicles including light, medium and heavy-duty trucks and buses; passenger cars including sport utility vehicles and pickup trucks under the name of "Isuzu D-MAX," "Isuzu mu-X" and "Panther;" diesel engines for construction machinery, freezer units and generators; diesel engines for passenger vehicles; and marine engines for commercial boats. In addition, Co.'s subsidiary provides commercial vehicle leasing and maintenance services.

JMDC

JMDC Inc. is a Japan-based company mainly engaged in the health big data business, telemedicine business and dispensing pharmacy support business. The Company operates in three business segments. The Health Big Data segment is engaged in the provision of receipt data analysis and health promotion solutions, and personal health information platforms, the build, management and analysis of medical databases such as receipt data and medical examination data, the build and sale of drug databases, and the development and provision of systems using drug databases for medical institutions. The Telemedicine segment is engaged in the provision of remote image diagnosis matching services, and infrastructure systems for remote image diagnosis. The Dispensing Pharmacy Support segment is engaged in the development and provision of business systems and electronic medication record for dispensing pharmacies, as well as the operation of dispensing pharmacies.

Kakaku.com Inc.

Kakaku.com is engaged in the operation of price comparison and other portal websites. Internet Media segment operates a price comparison site "Kakaku.com"comparing various products including computers, home appliances, internet service providers, insurance, food/beverages and cosmetics, restaurant review site "tabelog.com" and other portal sites including a hotel deals and last minute deals site "yoyaq.com," travel-related review and comparison site "4travel.jp," residential real estate portal site "sumaity.com," lifestyle portal site "kinarino.jp," movie information site "eiga.com"and auto enthusiast site "webCG." Finance segment is engaged in the provision of insurance agency services.

KDDI Corporation

KDDI is a telecommunications company. Along with its affiliates, Co. operates in four principal business segments: personal, value, business, and global. Co. is engaged in the sale of mobile handset; and the provision of mobile telecommunication services under "au" brand name, Internet contents, settlement service, and electronic money service for individual customers. Co. offers information and communication technology ("ICT") solution services and data center services for domestic corporate customers, overseas companies and individual customers. Co. is also involved in the call center business, the research and technological development, and the telecommunication facilities maintenance.

Kioxia Corporation (285A JT)

Konica Minolta Inc.

Konica Minolta and its affiliates are mainly engaged in the manufacture and sale of information technologies related equipment, optical and sensing devices, and healthcare equipment. Co.'s principal products are multi-functional peripherals ("MFPs"), laser printers, filing devices, facsimile machines, and equipment for production printing systems and graphic arts, as well as related solution services; digital X-ray diagnostic image systems, digital mammography, and diagnostic ultrasound systems; and lens units, pickup lenses for optical disks, TAC films for LCD polarizer, and high-precision photo plates. In addition, Co. is engaged in the operation of planetariums.

Kyoritsu Maintenance (9616 JT)

Kyoritsu Maintenance Co. Ltd.

Kyoritsu Maintenance is engaged in the dormitory management business. Co. operates in five business segments. Dormitory segment is engaged in the operation and management of student and company dormitories. Hotels segment is engaged in the operation of business hotels under the name of "Dormy Inn" and resort hotels. Building Maintenance segment provides building maintenance services including property management, cleaning, and equipment maintenance. Foods segment is engaged in the operation of Japanese restaurants and the provision of food services to schools and companies' cafeterias. Development segment is engaged in the construction, planning, design, and brokerage of condominiums.

Mazda Motor Corp.

Mazda Motor and its affiliates are mainly engaged in the manufacture and sale of passenger and commercial vehicles. Co. provides compact vehicles, sports cars, sedans, mini vans, light cars, commercial vehicles, welfare vehicles and customized vehicles, as well as car accessories. Co.'s principal products are four-wheeled vehicles, gasoline reciprocating engines, diesel engines, and automatic and manual transmissions for vehicles. Co.'s principal brand automobiles include Demio, Axela, Atenza, CX-3, CX-5, CX-8, Roadster, Carol, Flair, Flair Wagon, Scrum Wagon, Bongo, Titan, Familia Van, and Scrum Van/Truck.

Mercari Inc.

Murata Manufacturing Co. Ltd.

Murata Manufacturing is mainly engaged in the development, manufacture and sale of electronic components and modules in Japan, North America and certain other Asian and European countries. Co.'s products are sold mainly to electronics companies for use as components in telecommunication, computer, audio, video, automotive electronics and other electronic products. Co. is engaged in the development, manufacture and sale of electronic parts and related products, including components for capacitors and piezoelectric products, as well as modules products; the provision of welfare services, personnel services, education and training services, as well as the leasing and management of real estate.

NEC Corp.

NEC is the parent company of a group engaged in the manufacture and sale of computers, software, communications equipment, and electric devices. Co. operates in four business segments: public, enterprise, telecom carrier, and system platform. Co. supplies integration, maintenance and support, and outsourcing services and system equipment for government, public and enterprises; network infrastructure to telecom carriers; hardware such as servers and mainframes, software, enterprise networks solutions. In addition, Co. also provides smart energy such as electrodes and energy storage systems, as well as smartphones, mobile phones, "BIGLOBE" Internet services and lighting equipment.

Nidec Corporation

NIDEC and its subsidiaries are primarily engaged in the design, development, manufacture and marketing of small precision motors, mid-size motors, machinery, electronic and optical components, and other products. Co.'s principal products are spindle motors for hard disk drives, motors for optical disk drives, small precision fans and other small motors; mid-size motors; test systems, measuring equipment, power transmission equipment, factory automation systems, card readers and industrial robots; camera shutters, camera lens units, switches, trimmer potentiometers, motor driven actuator units, processing and precision plastic mold products; and auto parts and pivot assemblies.

Nikon Corp.

Nikon and its affiliates are mainly engaged in the manufacture and sale of precision and imaging products. Co.'s principal products include IC steppers, LCD steppers, digital SLR cameras, compact digital cameras, interchangeable camera lenses, microscopes, measuring instruments and inspection equipment, as well as retinal imaging products. Co. is also engaged in development of observation devices, including an IR1 infrared camera and an ultraviolet imager; the manufacture of solid-state lasers that emit a deep ultraviolet laser light with a 193-nanometer wavelength; the development and production of optical glass materials and ophthalmic lenses.

Nintendo Co. Ltd.

Nintendo is mainly engaged in the development, manufacture, and sale of home-use game hardware/software and peripheral equipment as well as software under the name of "Nintendo DS," "Nintendo 3DS," "Game Boy," "Nintendo 64,"" Game Boy Advance," "Wii," "Nintendo GameCube," "Game Boy Color" and "e-Reader (trading card games)." Co.'s principal software trademarks include "Pokemon," "Super Mario Bros.," "The Legend of Zelda," "STARFOX64" and others. Co. also provides online games and repair services. In addition, Co. is involved in the manufacture and sale of Japanese playing cards called "Karuta," playing cards and board games, as well as the management of intellectual property rights.

Panasonic Corporation

Panasonic offers a range of products, systems and components for consumer, business and industrial use based on electronics and precision technology, expanding to building materials and equipment, and housing business. Co. divides its businesses into five segments: Appliances, Eco Solutions, Connected Solutions, Automotive & Industrial Systems and Other. Co.'s principal products include home appliances such as refrigerators, room air conditioners, washing machines and vacuum cleaners; lighting fixtures and electric lamps, video and audio equipment, electrical components, batteries, semiconductors and optical devices.

Rakuten Inc.

Rakuten is mainly engaged in the Internet-related business. Along with its affiliates, Co. operates in two business segments. The Internet Services segment is engaged in the operation of electronic commerce sites, including an Internet shopping mall "Rakuten Ichiba," an online cash back site, a travel booking site, portal sites and digital contents sites; the sale of advertising on Co.'s sites; the provision of messaging and communication services; and the management of a professional baseball team "Tohoku Rakuten Golden Eagles." FinTech segment is engaged in the provision of Internet banking services and online securities trading services, and the credit card and life insurance businesses.

Renesas Electronics Corporation

Renesas Electronics is a semiconductor solution provider. Co.'s solutions include electronic products and systems for communications, computing and peripherals, consumer electronics, as well as automotive and industrial sectors. Along with its subsidiaries and associated company, Co. operates in four business segments: automotive, industrial, broad-based and other semiconductors. Co.'s principal products are microcontrollers, microprocessors, smart analogs, secure MCUs (Microcontroller Units), embedded systems platform, software, tools, IPDs (Intelligent Power Devices), power MOSFET (Metal-Oxide-Semiconductor Field-Effect Transistors), analog and mixed-signal ICs, and transistors.

Ricoh Company Ltd.

Ricoh is engaged in the development, manufacture, sale and service of office equipment and printing equipment. Office Printing segment offers multifunctional printers, copiers, laser printers, digital duplicators, wide format printers, facsimile, scanners and related parts and supplies. Office Service segment offers PCs, servers, network equipment, projectors and unified communication systems for video/web conferencing. Commercial Printing segment offers cut sheet printers, continuous feed printers, related parts and supplies. Industrial Printing segment offers inkjet heads, imaging systems and industrial printers. Thermal Media segment offers thermal paper and thermal transfer ribbons.

Rohm Co. Ltd.

ROHM is mainly engaged in the manufacture and sale of electronic components. ICs segment offers analog switches, multiplexers, logic ICs, memory ICs, amplifiers, clocks and timers, sensor ICs, data converters, interface ICs communication LSIs, audio and video ICs and other ICs. The segment also provides foundry services. Discrete Semiconductor Devices segment offers diodes, transistors, light emitting diodes and laser diodes. Modules segment offers print heads, optical modules and power modules. Co. is also engaged in the manufacture and sale of resistors and tantalum capacitors.

SBI Holdings [Strategic Business Innovator Group] (8473 JT)

Sharp Corporation

Sharp is an electronics manufacturer. Along with its subsidiaries and associated companies, Co. is mainly engaged in the manufacturing and sales of telecommunications equipment, electric and electronic application equipment, and electronic components. Co.'s principal business segments are IoT Communications, Health and Environment Systems, Business Solutions, Camera Modules, Electronic Components and Devices, Energy Solutions, and Display Devices. Co.'s principal products are mobile phones, tablets, electronic dictionaries, calculators, refrigerators, POS systems, electronic, camera modules, sensor modules, proximity sensors, solar cells, and LCD color televisions.

Shift

SHIFT Inc. is a Japan-based company mainly engaged in the provision of software test services. The Company operates through two business segments. The Enterprise Market segment is engaged in the provision of general service related to quality assurance of software in business systems and information systems for companies of financial industry, distribution industry, manufacturing industry, communication industry and Web services industry. The Entertainment Market segment is engaged in the provision of general services related to quality assurance of software for enterprises providing mobile games, social games, consumer games and other entertainment products.

Sony Financial Holdings Inc.

Sony Financial Holdings is a holding company mainly engaged in the insurance business. Co. has three business segments. The Life Insurance segment provides customized life insurance products through sales staff and agencies, as well as variable annuity products. The Non-life Insurance segment is engaged in the provision of automobile insurance and medical insurance focused on cancer through Internet and telephone. The Banking segment provides deposit, foreign currency deposit, housing loan, investment trust and foreign exchange margin trading services, as well as financial product agency services. In addition, Co. is also engaged in the nursing care business.

Sysmex Corporation

Sysmex and its affiliates are mainly engaged in the healthcare business. Co. is involved in the development, manufacture, and sale of clinical laboratory testing equipment and reagents. Co. provides instruments, in vitro diagnostic reagents, and software for testing of blood and urine samples in the field of hematology, urinalysis, immuno-chemistry, clinical chemistry, and hemostasis. Co.'s principal products include hematology (XN-L and XN series, pocH™-80i, XP-300™), hemostasis (CS-5100™), immunochemistry (HISCL™-5000), and urinalysis (UD-10™, UF-5000™, UC-3500™). Co. operates its operations in Japan, the Americas, EMEA (Europe, the Middle East and Africa), China and Asia Pacific regions.

Taiyo Yuden Co. Ltd.

TAIYO YUDEN is a manufacturer mainly engaged in the electronic component business. Co. is involved in the manufacture and sale of electronic parts such as ceramic condensers, inductors, ferrite-applied components, ferrite cores, high frequency dielectric components, circuits modules, energy devices and composite ceramic applied components, among others. Co. is also engaged in the temporary staffing services, as well as consultation services for environmental measurement.

Takeda Pharmaceutical Co. Ltd.

Takeda Pharmaceutical is a public company incorporated in Japan. Co. and its subsidiaries is a global pharmaceutical group and is engaged in the research, development, manufacturing and marketing of pharmaceutical products, over-the-counter (“OTC”) medicines and quasi-drug consumer products, and other healthcare products. Co.'s principal pharmaceutical products include medicines in the following therapeutic areas: gastroenterology, oncology and neuroscience.

TDK Corporation

TDK is a manufacturer of recording media, ferrite products and recording device products, and a producer of inductor, ceramic capacitor, magnet, HDD head and other components. Co.'s principal business segments are passive components, sensor application products, magnetic application products, film application products and others. Co.'s principal products include ceramic capacitors, aluminum electrolytic capacitors, film capacitors, inductive devices, high-frequency components, piezoelectric materials and circuit protection components, sensors, HDD head suspension, recording devices, power supplies and magnets, and mechatronics.

Tokyo Electron Ltd.

Tokyo Electron is a supplier of semiconductor production equipment ("SPE") and flat panel display ("FPD") selling through global network that spans Japan, the U.S., Europe and Asia. Co.'s principal products are coater/developers, plasma etch systems, thermal processing systems, single wafer deposition systems, cleaning systems (auto wet station, single wafer cleaning system, pre-clean system and scrubber system), wafer prober, FPD coater/developers and FPD plasma etch/ash systems. In addition, Co., through its subsidiaries, is engaged in the provision of transportation services, insurance services, as well as the support services for Co.'s photovoltaic cell ("PV") production equipment.

Tokyo Ohka Kogyo Co. Ltd.

Tokyo Ohka Kogyo is mainly engaged in the manufacture and sale of materials for electronics. Along with its subsidiaries and associated companies, Co. operates in two business segments: material and equipment. Material segment is engaged in the manufacture and sale of electronics functional materials and high purity chemicals. Equipment segment is engaged in the manufacture, sale and maintenance of process equipment for liquid crystal display ("LCD") panels and semiconductor manufacturing equipment. As of Dec 31 2017, Co. maintains five plants in Fukushima, Shizuoka, Kumamoto, Tochigi and Saitama, Japan, as well as its logistics center in Kanagawa, Japan.

Tokyo Steel Manufacturing Co. Ltd.

Tokyo Steel Manufacturing is mainly engaged in the manufacture and sale of electric-arc-furnaces, as well as a recycler of steel scrap. Co.'s primary products include H beams, sheet piles (U-shaped steel-sheet piles), I beams, checkered H-beams, channels, reinforcing bars, heavy plates, hot rolled coils, pickled and oiled coils (P/O coils), hot-dip galvanized coils (T-Zinc, T-alloy), checkered coils, and steel sheets. As of Mar 31 2016, Co. maintains four domestic plants in Aichi, Okayama, Fukuoka and Tochigi prefectures and a steel center in Kagawa prefecture.

VISIONAL INC

WOLFSPEED INC

Z Holdings Corporation

Yahoo Japan is engaged in the provision of Internet advertising and e-commerce services. Media Business segment provides marketing and advertising services including paid search, display, in-feed video advertising and other advertising-related services for corporations; and Yahoo! News and media-related services. Commerce Business segment provides e-commerce related services including YAHUOKU! (net auction site), Yahoo! Shopping, ASKUL, LOHACO and other shopping websites; membership services including Yahoo! Premium, Yahoo! BB and other services; and financial and payment-related services including credit card, e-money, foreign exchange margin trading and other related services.

Provider
Pelham Smithers Associates Ltd
Pelham Smithers Associates Ltd

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries. 

The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012. 

Analysts
Pelham Smithers

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