PSA Japan Research Round-Up for the Week ending April 18, 2019

The Weekly Comment
Pelham Smithers previews an unusually interesting earnings season
Reports / Flash Notes Summaries
1. Wired Magazine Interview with Sony Offers Window on PS5
2. Fast & Furious 5G
3. Outsourcing (2427 JT): Opportunities for the Taking
Company / Sector / Thematic Comments at a Glance
Technology: Consumer Electronics / Gaming
1. Qualcomm (QCOM US), Apple (AAPL US) Settle on Qualcomm Terms; Positive for Japan Handset Component Makers
2. Apple (AAPL US) Spending US$x00mils on “Apple Arcade” Games
3. 1Q 2019 Video Game Console Sales
4. New Console Releases for Nintendo’s (7974 JT) and Sony (6758 JT)
Technology: Industrial Electronics / SPE / Components / Precision
5. Harmonic Drive (6324 JT) Q4 Parent Orders -85% YoY
6. Nidec (6594 JT) To Acquire Omron’s (6645 JT) Auto Electric Unit
7. Nikkei Warns of Canon Forecast Cut
8. 5G Update – Reminder that 5G is Only Partly About Phones
Chemicals / Materials
9. Update on 5G Materials
10. Samsung (005930 KS) and TSMC (2330 JT) Flaunt EUV Technologies
11. Merck KGaA Expands its Electronic Materials Universe
12. Short-lived Euphoria Over Japan Display’s (6740 JT) Bailout
13. China Starts Anti-Dumping Probe into Methionine
14. Aisin Seiki (7259 JT) and Denso (6902 JT) Shine
15. Automation Advances Ahead of Earnings
16. NOK (7240 JT) Writes Off Portion of FPC Business
Internet / eCommerce
17. CyberAgent’s (4751 JT) AbemaTV Goes Global
18. Rakuten (4755 JT) Falls as NTT Docomo (9437 JT) Cuts Prices
Enterprise Software
19. RPA Holdings (6572 JT) Continues to Surge
20. Transcosmos (9715 JT) Boosted by Goldman Sachs (GS US) Stake Increase
Telecom
21. Fast & Furious 5G
Macro / Market
22 .China Macro Data
23. China’s 1Q 2019 Liquidity Boom

PSA Company Visits, Tours and Interviews
• Contacted / Interviewed: Sumitomo Chemical (4005 JT)
• Attended earnings meeting: ABC Mart (2670 JT)

PSA in the Press
• Thao Nguyen on Mixi (2121 JT): /sites/gracechung/2019/04/10/japans-richest-2019-tech-darling-mixi-loses-steam-dropping-founder-from-the-billionaire-ranks/#70c1dc5a6688

• Pelham Smithers on Nintendo (7974 JT): /article/new-nintendo-switch-models-2019
Reports / Flash Notes Summaries
1. Wired Magazine Interview with Sony Offers Window on PS5
Wired Magazine met PS5 head of development lead architect Mark Cerny. A lot was revealed / confirmed about the PS5 that has analyst Pelham Smithers convinced that Sony is keen to distance itself from the rest of the video game industry and become the industry’s IMAX – where you go to play the ultimate video games.
2. Fast & Furious 5G
Pelham Smithers discusses how quickly 5G is taking hold and the implications for the telco players in Japan.
3. Outsourcing (2427 JT): Opportunities for the Taking
Analyst Lindsay Whipp explains what Japanese dispatching and outsourcing company Outsourcing does, why its strategy is so popular with foreign investors, and explains what she thinks the company should do next.

Weekly Comment by Pelham Smithers
Next week sees the launch of earnings season – ahead of a lengthy market hiatus while Japan changes Emperor and goes on holiday. So as not to have results hanging over their vacation, many Japanese companies are pushing to produce results within four weeks of April. This is creating a mad rush of results out on Friday 26 April. Arguably the most important figures come from Sony (6758 JT) and they are due out on that Friday. The company will be looking to round off a record FY18 with a solid 4Q performance. All eyes will be on the damage done to results by the handset division, and by extension, on whether management changes its mind over pulling the plug on the division in FY19, and acts. Unlike other stocks which won’t trade before 7 May, Sony stock will then see seven sessions on the NYSE to respond to the results, forecasts and any titbits from the earnings meeting. Also likely to trade actively over the Japanese holiday are the ADRs of Nintendo (7974 JT), but here, the TSE will have a couple of sessions to respond, as the firm reports on Thursday 25 April. Unseasonal strength in Switch console sales hint at a very good 4Q for Nintendo, which if it materializes should help with FY19 forecasts. Less important than FY19 earnings estimates may well be Switch hardware forecasts, as this gives a window onto Nintendo’s plans and expectations for the console amid all the talk of high and low-end Switch replacements.