- Julie Boote
- Lindsay Whipp
- Pelham Smithers
- Thao Nguyen
- William Nestuk
PSA Japan Research Round-Up for the Week to Dec 21, 2018 . Wishing you all the best over the festive season and a happy new year
The Weekly CommentNot expensive to begin with, Japan’s video game stocks have been sold-off due to 1) worries of market cannibalization by Battle Royale games, 2) the FAANG sell-off and 3) the China license moratorium. The result is that several names have a market cap that is less than double the cash on the balance sheet. Add in investments, which the industry is always keen to do, and adjusted EV in some instances is nugatory. Pelham Smithers discusses whether this is an opportunity or a value trap?
Reports / Flash Notes Summaries
1. PKSHA Technology (3993 JT): Going All-In on AI
2. Mazda (7261 JT): Will the Mazda3 Save the Day?
Company / Sector / Thematic Comments
Technology: Consumer Electronics / Gaming / Precision / Components
1. China to Resume Game Licensing? Good News for Capcom (9697 JT), Nexon (3659 JT)
2. Qualcomm (QCOMM US) Wins 2nd Court Order vs Apple (AAPL US) – Implications for Suppliers
3. Smash Bros Bugs – A History
4. Sony (6758 JT) Set to be No. 4 in US Box Office in 2018
5. Game Licensing Logjam in China Continues
Chemicals / Materials
6. Sumitomo Chemical (4005 JT) and the Bipolar Reaction to Latuda News
7. FDK’s (6955 JT) Small Solid-State LiB
8. Battered Chemical Shares – Consider Ube (4208 JT)
Autos
9. No Panic Among Nissan (7201 JT) Investors
10. Nissan Laying off Workers in Mexico
11. Mazda’s (7261 JT) Production Lines to Become More Flexible
Auto Parts / Machinery
12. Hoshizaki (6465 JT) Rising Ahead of Dec 27 Deadline
Telecom:
13. SoftBank (Mobile) (9434 JT) Now It Has Listed
Internet / eCommerce
14. Mercari (4385 JT) to Dissolve Mercari Europe and Merpay 13
15. CyberAgent’s (4751 JT) Abema Premium Subscribers Rise 4.5x YoY
Enterprise Software 13
16. GMO Internet (9449 JT) To Sell Down Stake in GMO Payment (3769 JT)
17. Outsourcing Companies Hit 52-Week Lows
18. Oracle Japan (4716 JT) Reports a Robust H1
Pharma:
19. Takeda (4502 JT) Gets Moody’s Downgrade
20. Eisai (4523 JT)’s Humira Less Effective than Lilly’s (LLY US) Taltz
Macro:
21. Japan Enters Bear Market
22. Japan Trade Numbers Worsen
Weekly Market Comment by Pelham Smithers
Are Small Cap Video Game Stocks a Value Trap?
Even prior to this latest downward move in the market, smaller cap video game stocks had seen massive value compression, and the situation has only got worse with the latest market sell-off. Not expensive to begin with, the sector has been sold-off first over worries of market cannibalization by Battle Royale games, then they got caught up in the Activision (ATVI US) / EA (EA US) sell-off, which was linked to the FAANG sell-off. Then they got thrown into the China license impasse caldron to stew some more. The result is that several names have a market cap that’s less than double the cash on the balance sheet. Add in investments, which the industry is always keen to do, and adjusted EV in some instances is nugatory.
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.
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