PSA Japan Research Round-Up for the Week Ending July 13, 2018

The Weekly Comment
Pelham Smithers considers the tariff spat and finds reasons to be cheerful about Japanese equities.
Reports / Flash Notes Summaries at a Glance
1. LINE (3938 JP) – Better Viewed as a Growth Stock
2. Japanese Video Game Sector: Ranking Video Game Stocks as We Head into Summer Holidays
3. Nabtesco (6268 JP) Q1 FY18 Update: Pessimism Reflected in Share Price
Company / Sector / Thematic Comments at a Glance
1. Panasonic (6752 JP) “Interested” in Working with Tesla (TSLA US) in China, yet to be Invited 4
2. EU Signalling Changes to Online Platform System for Music
3. Murata (6981 JP) and the Lithium Battery-Related MLCC Opportunity Space
4. Tale of two xEV Component Suppliers: Murata (6981 JP) and Rohm (6963 JP)
5. Nikon (7731 JP) to Acquire Chuo Sangio
6. Zeon (4205 JP) Rebounds on Share Buybacks
7. CATL in Germany an Opportunity for Japan’s LiB Supply Chain
8. Nissan (7201 JP) Admits to Emission Data Manipulation
9. Subdued Performance of Auto Sector Despite Sharp Yen Depreciation
10. Subaru (7270 JP) Fails to Inspire with New Mid-term Plan
11. Excavator Makers Hit by Downgrade
12. Good FY18 Q1 Results and the Strong USD Buoy Takeuchi (6432 JP)
13. In-Line FY18 Q1 for Yaskawa
14. Kitanotatsujin (2930 JP) Sees Profits Double, Sales Surge
15. MonotaRO (3064 JP) Delivers Strong Sales Figures for June
16. SoftBank (9984 JP) Files to IPO its Mobile Business

PSA Company Visits, Tours and Interviews
• Conference call with Ube Industries (4208 JP), Yaskawa (6506 JP)

Reports / Flash Notes Summaries
1. LINE (3938 JP) – Better Viewed as a Growth Stock
Analyst Thao Nguyen thinks the market has already taken LINE’s aggressive investment plan into account. This report discusses the opportunities ahead and suggests that LINE is better viewed as a growth stock: if there is any company in Japan which can scale new businesses quickly and has a relatively high chance of success, it is LINE.
2. Japanese Video Game Sector: Ranking Video Game Stocks as We Head into Summer Holidays
Although online and mobile gaming have rendered the video games industry more 24 / 7 / 365, with eSports likely to reinforce that trend, the period between E3 and the Tokyo Games Show in Sept / Oct is something of a downtime for the sector as far as news flow is concerned. Pelham Smithers ranks the Japanese Video Game Sector names ahead of the Christmas run-up and the autumn eSports season.
3. Nabtesco (6268 JP) Q1 FY18 Update: Pessimism Reflected in Share Price
Analyst William Nestuk considers that Nabtesco’s valuations and investor expectations are both low, with upside potential in hydraulics, on which the company’s presentation could be focused at the upcoming Aug 7 1H results meeting. Market cap is $3.9bn.

Weekly Market Comment by Pelham Smithers
Generally speaking, this era of globalization of world trade has seen countries / economic blocks increase the role of trade in the economy. If that sounds self-evident, it is worth noting that there are two exceptions, and they are big ones. Exports : GDP in the US is less than 12%, just 2ppts above where it was in the early 90s, while China’s is actually lower. By comparison, Exports: GDP for the EU have risen from 25% to 45% since 1994.