Sony (6758) - Reassessing Situation after 1Q Results
Sony’s 1Q performance underscores why it has become such a difficult stock not to like. On almost any valuation measure the shares range between “cheap” and “fair value”, so as long as the company delivers a performance in line with expectations both in the near term and longer term, the stock should deliver above average returns. The FY16 1Q performance was evidence of the company delivering in the near term. However, it is also evidence that the firm’s longer term positioning is getting better all the time.
In this report we discuss how the business has evolved from a mass-market consumer electronics company to a high-value-added media entertainment company. Considering this transformation, we suggest valuations based on both sum-of-the-parts and EV/OP.
Key Points
- 1Q demonstrates that Sony is running ahead of expectations.
- TVs / handsets / consoles combined OP grew from ¥7.5bil in 1Q FY15 to ¥64.6bil in FY16 Q1
- The Game / Network business is likely to end FY16 as Sony’s most profitable business
- We are going for ¥341bil in FY16 OP (before any write-downs on the Battery business), which is ¥30bil ahead of consensus and ¥41bil ahead of Sony’s forecast.
- Looking out to 2020, we discuss Sony’s new sources of growth: augmented reality (AR), internet of things (IoT), medical, robotics and ADAS.
Sony is engaged in the development, design, production, manufacture, offer and sale of various kinds of electronic equipment, instruments and devices for consumer, professional and industrial markets such as network services, game hardware and software, televisions, audio and video recorders and players, still and video cameras, mobile phones, and semiconductors. Co. is engaged in the development, production, manufacture, and distribution of recorded music and the management and licensing of the words and music of songs as well as the production and distribution of animation titles. Co. is also engaged in the production, acquisition and distribution of motion pictures and television.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.