The Must Read PSA Weekly Research Round-Up (week to Oct 20): Highlighting reports on Japan Market Strategy / Yahoo Japan / Mitsubishi Motors

Inside the PSA Japan Weekly Research Round-Up you have:

The Weekly Comment by Pelham Smithers (available upon request):

Pelham considers what we should make of the Kobe Steel and Nissan scandals. Are such episodes part of the “new normal”?

Reports / Flash Notes Published This Week: Headlines at a Glance (full reports available upon request):
1.     Japan Market Strategy – Will the Market Slump in January?
2.     Yahoo Japan (4689) – Buried Treasure
3.     Mitsubishi Motors’ (7211) Reinvention – Newly found confidence backed by Nissan-style strategies

Company / Sector / Thematic Comments at a Glance (for more details, please ask):

Macro / Politics:
1.     The Changing Face of the Nikkei 225
2.     Newspaper Polls Continue to Indicate Big Win for Abe
3.     AIAI Rises 0.1% MoM

Technology: Consumer and Industrial Electronics / Electronic Components 
4.     Sony (6758): Games for Rival Systems / FY17 Q2 Preview
5.     Apple Cuts iPhone 8 Production: Implications for Pricing Discussed
6.     Canon (7751): FY17 Q3 Earnings Preview – Revision to Full Year More than Possible
7.     Murata (6981): To Buy a Sony Components Factory
8.     Have We Hit Peak SPE? Read-Across from ASML’s September Quarter Results
9.     Marumae (6264): Hints of an SPE cycle dichotomy
10.   Nikon (7731): Disappointing Nikkei Preview
Chemicals / Electronic Materials
11.   Toray to expand LiB separator capacity in Korea
12.   Shin-Etsu Chemical (4063): Factory Tour Feedback – Rare Earth Magnets / IC Blanks / Cellulose
Autos
13.   Nissan (7201) Inspection Failure Case Draws Wider Circles
14.   Honda (7267): Battle in the Mid-Size Sedan Segment Heats up with Launch of New Accord
Auto Parts / Machinery
15.   Yaskawa (6506): FY17 Q2 Earnings Unlikely to Surprise
16.   Fanuc (6954): Upcoming Plant Tour
17.   New Listing Highs for Stanley Electric (6923) / Daikin (6367)
Communications: Internet /Telecom / Media
18.   GungHo (3765): Using Puzzle & Dragons Radar to Rekindle Lost Popularity
19.   SoftBank (9984): Planning a Second Fund? / Revisiting the Discounted Value Discussion
20.   Asatsu DK (9747): Another Shareholder Objects to Bain’s Bid / An Unimpressive Interview
Real Estate
21.   LaSalle Logiport REIT (3466): Warns of Logistics Center Oversupply on the Horizon

PSA Company Visits, Tours and Interviews:
Attended information meeting of Konica Minolta (4902), Bic Camera (3048), Nippon Accommodation (3226), Marumae (6264) 
Attended tour of Shin-Etsu Chemical’s (4063) Takefu Plant

List of PSA Published Reports as of August 2017: see below 
 
PSA Reports / Notes Published This Week
 
1.    Japan Market Strategy – Will the Market Slump in January?
With the Japanese stock market on the up, we think the question should be, is this a seasonal rally, or is it structural? Analyst Pelham Smithers considers recent monetary base moves as compared with recent past years, asks whether the market is likely to overheat, establishes PSA’s base scenario in the light of earnings expectations and valuations, and discusses interesting sector weightings and themes.
2.    Yahoo Japan (4689) – Buried Treasure
Analyst Thao Nguyen reiterates her view that Yahoo Japan holds great promise despite its focus on the domestic market. This is thanks to new opportunities arising from its No.1 position as a search engine and Internet Media, as well as from its fast-growing e-commerce businesses. The company is currently on a spending spree to accelerate the growth of existing businesses and to develop new areas. We think that this move is necessary from a long-term perspective and expect that the current deterioration in profitability will be temporary. We retain our view that YJ is a buried treasure, undemandingly valued on a forward FY17 EV/OP of 13x.
3.    Mitsubishi Motors (7211): Reinvention
Mitsubishi Motors (MMC) released its 3-year mid-term plan on October 18th. Our general impression of the plan and the presentation was that MMC is back on stage with a newly-found confidence, thanks to the support of Alliance partner Nissan (7201). While autonomous drive, mobility services, connectivity and electrification would have been red alert topics before Nissan’s takeover, MMC now knows it has a chance to survive the upheavals of the industry as a member of the Nissan-Renault Alliance group.