PSA Research Round-Up for the Week ending March 29, 2019: With reports out on istyle / Nintendo / Hitachi Chemical

The Weekly Comment Summary
Julie Boote's header gives the game away: "Renault-Nissan-Fiat Chrysler: A Match Made in Hell?"
Reports / Flash Notes Summaries
1. istyle (3660 JT): Opportunities Abound
2. Why Investors Need to be Looking at Nintendo (7974 JT) Stock Right Now
3. Hitachi Chemical (4217 JT) Aims to Get Back on Track
Company / Sector / Thematic Comments at a Glance
Technology: Consumer Electronics / Gaming
1. Sony (6758 JT) Announces CE Divisional Reorganization / Hirai Retires as Chairman
2. Nintendo (7974 JT): VR Labo Launch and Hints of Two New Switch Consoles
3. Casino Regulations Generally as Telegraphed
4. Camera Market Starts Year in Poor Shape
Technology: Solar
5. Is Solar on the Mend?
Chemicals / Materials
6. Wafer Makers Hope for Some Growth in 2019
7. Saturated SAP Markets
8. Central Glass (4044 JT) Shares Fall after Small Upward Revision
Autos
9. Honda (7267 JT) and Hino (7205 JT) Join Toyota’s Mobility Service Joint Venture
10. Mitsubishi Motors (7211 JT) to Develop New Pick-up Platform for Alliance
Auto Parts / Machinery
11. Nabtesco (6268 JT) and SHI (6302 JT) Relative Winners in Hydraulic
Telecom
12. Telco Sector Outlook
13. KDDi (9433 JT) to Launch 5G in Autumn
Internet / eCommerce
14. ZOZO (3092 JT) to Receive a ¥15bil Loan
15. LINE (3938 JT) and Mercari (4385 JT) Form Mobile Payment Alliance
16. Nexon (3659 JT) Uses AI in Live-game Operations
Enterprise Software
17. February Marks Another Strong Month for Cybozu (4776 JT)
18. Oracle Japan (4716 JT): Steady as She Goes
Pharmaceutical
19. The Rare Disease Conundrum
20. Bad News for Eisai (4523 JT), Shionogi (4507 JT): Implications for Sector Values
21. AZN Buys into DSK’s (4568 JT) DS-8201
Macro / Market / Miscellaneous
22. Another Round of “Glass Not Quite Half Full” Economic Data
23. What Next for Japanese Equities?
24. Are There Cost-Control Issues at Japan’s High Fliers?
PSA Company Visits, Tours and Interviews
• Contacted / Interviewed: Sumitomo Chemical (4005 JT), Daifuku (6383 JT), Nabtesco (6268 JT), Outsourcing (2427 JT), TIS (3626 JT)
Weekly Comment by Julie Boote
Renault-Nissan-Fiat Chrysler: A Match Made in Hell?
The Financial Times reported that Renault (RNO FP) was planning to restart merger talks with Nissan (7201 JT) this year and that another merger, possibly with Fiat Chrysler (FCAU US), was on the cards. All interested parties have so far denied any knowledge of these plans, supposedly devised by former Chairman Carlos Ghosn, but we nevertheless believe the story to be true. There are two reasons why we think that such a double merger is a very bad idea indeed. First, Nissan and Renault need to put their house in order, so a huge distraction in the form of merger talks at this point in time would be counterproductive, in our view: In the aftermath of the Carlos Ghosn affair, clear corporate culture failings need to be addressed; management needs to be reorganised, while the structure and workings of the alliance need revisiting.
For Nissan, the poor sales situation in the US and Europe requires immediate attention. Improving the brand image to support profitability is another urgent matter the company needs to focus on. In addition, the integration of the new alliance partner, Mitsubishi Motors [MMC] (7211 JT), is not complete as questions on product and regional overlaps, as well as alternative powertrain choices, need to be solved. Moreover, while Toyota (7203 JT) is entering into one new tech / new service venture after the other, actively transforming itself into a 21st century new mobility service provider, Nissan and Renault are at the risk of falling behind. While there had been some initiatives during Carlos Ghosn’s regime, we have heard very little recently about any projects, be these ride hailing services, AD, AI or connectivity. This suggests that management is too distracted to work on these long-term projects. Perhaps a change in direction is currently being discussed. We believe that the challenges the auto industry are facing need to be tackled head-on and that the addition of another automaker to the group is not a solution to the problem.