The PSA Weekly Research Round-Up for the Week to 31 January 2025

Weekly Comment Summary
Anyone hoping / thinking that food prices might have peaked with Dec 2024’s surge, needs to think again after the latest Tokyo CPI data for January.
Pelham Smithers discusses.

Reports / Flash Notes Summaries
1. Why Japanese Video Game Stocks are Back in Vogue
In this report Pelham Smithers explains why video game stocks are back in vogue and explains the thinking behind PSA's picks in the sector.
2. Hino Motors (7205 JT) on a Rebound as Emission Data Crisis Concludes
News that Hino settled its emission fraud case with US authorities should finally put an end to an affair that has dragged Hino down for almost three years. Investor focus can now return to the truck maker’s operational performance. Analyst Julie Boote assesses the company’s earnings recovery potential and the possible impact of a merger with Mitsubishi Fuso Truck & Bus, and likes what she sees.
3. Obic Co (4684 JT): Growth Now Slowing
Obic is a difficult company to criticise. It has OPM higher than 60%, around double that of foreign peers, and has grown OP every year for the past three decades. That said, quarterly OP and sales growth has been slowing, raising questions about its valuations relative to growth expectations, particularly when compared to global software companies. Lindsay Whipp discusses.

PSA Company Visits, Tours and Interviews
Visited: Insource (6200 JT), Treasure Factory (3093 JT), CUC (9158 JT)
1-1 Call with: M&A Capital Partners (6080 JT)
Presentations at: Shin-Etsu Chemical (4063 JT), Nitto Denko (6988 JT), Sekisui Chemical (4204 JT), TDK (6762 JT), Zeon Corp (4205 JT), Tokuyama Corp (4043 JT), M&A Research Institutes (9552 JT), Fanuc (6954 JT), HCM (6305 JT), Komatsu (6301 JT), Denso (6902 JT), Toyota Industries (6201 JT), Aisin (7259 JT)

PSA in the Press
Technology analyst Pelham Smithers features in the following Bloomberg write ups:
Japan Tech Leads Stocks Rebound as Market Finds DeepSeek Upsides [29 Jan]

Japan Tech Sell-off Extends as DeepSeek Pressures AI Stocks [28 Jan]. This article was also pick up by Fortune Asia: Japan tech selloff extends as DeepSeek pressures AI Stocks | Fortune Asia /asia/2025/01/28/japan-tech-selloff-extends-as-deepseek-pressures-ai-stocks
A Bullish Case is Building for Japan's Cyclicals [30 Jan] /news/articles/2025-01-31/-mario-kart-may-help-nintendo-rally-outlast-flight-from-ai-tech

Nintendo Stock Rally May Keep Going With Help From Mario Kart, Other Hit Games - Bloomberg [30 Jan] /news/newsletters/2025-01-27/nissan-s-underwhelming-overhaul-poses-risk-to-honda-tie-up?embedded-checkout=true

Autos analyst Julie Boote highlights issues with the tie-up between Nissan Motor and Honda in this Bloomberg article:
Nissan’s Underwhelming Overhaul Poses Risk to Honda Tie-Up [27 Jan]
Chemicals / Electronic Materials analyst Joel Scheiman’s views on Shin-Etsu Chemical’s Q3 performance are cited in this Bloomberg article:
Shin-Etsu Chemical Declines on PVC Weakness: Street Wrap

PSA Weekly Contents at a Glance
Reports / Flash Notes Summaries
1. Why Japanese Video Game Stocks are Back in Vogue
2. Hino Motors (7205 JT) on a Rebound as Emission Data Crisis Concludes
3. Obic Co (4684 JT): Growth Now Slowing
Company / Sector / Thematic Comments
Technology: Consumer Electronics, Gaming
1. Why Japanese Video Game Stocks are Back in Vogue 6
2. Sony Changes CEO – Nothing to See Here (How Times Have Changed)
3. Koei Tecmo FY24 Q3 Results
4. Capcom FY24 Q3 OP -26% YoY, Leaves Forecasts Unchanged
5. Toei Animation FY24 Q3 OP Flat
6. Konami FY24 Q3 OP +53% YoY; Revises Up Full-Year Guidance
7. Other News & Moves That Caught Our Eye
Technology: Industrial Electronics / Components / Semis & SPE / Precision
8. DeepSeek to the Fore
9. Renesas – Strength in Wireless Power Transmission
10. Nidec Eyes Earnings Improvements for Several Subdivisions
11. Advantest Q3 OP +158% YoY, Full-Year FY24 OP Guidance Raised
12. NEC Corp FY24 Q3 OP +95% YoY, Revises Up Full-Year Guidance
13. Canon in FY24 Q4 Loss on Medical Business Impairment Charge
14. Anritsu FY24 Q3 OP +28% YoY, No Change to Full-Year Forecast
15. Hitachi’s FY24 Q3 OP Falls -18% YoY but Ahead of Consensus; FY24 Guidance Raised
16. Socionext FY24 Q3 OP -45% YoY, Cuts Full-Year OP Target
17. Keyence FY24 Q3 OP +9% YoY
18. Other News & Moves That Caught Our Eye
Chemicals / Materials
19. UBE Corp Cuts FY24 Guidance, Accelerates Restructuring
20. After Q3, Shin-Etsu’s Q4 Also Looks Challenging
21. Other News & Moves That Caught Our Eye
Autos / New Mobility
22. Hino Raises OP Guidance by 50% / Shares Slump on Extraordinary Losses
23. Other News & Moves That Caught Our Eye
Auto Parts / Machinery / Capital Goods
24. Fanuc FY24 Q3 Weak: Signs of a Capex Recovery Keep Us Hopeful
25. HCM FY24 Q3 Unimpressive, Full-Year Guidance Looks Challenging
26. Komatsu FY24 Q3 OP Tops Highest Street Estimate
27. Denso FY24 Q3 OP Slightly Short
28. Toyota Industries: No Plan for Selling Toyota Shares
29. Other News & Moves That Caught Our Eye
Internet / eCommerce
30. CyberAgent FY25 Q1 OP Meets Consensus
31. Istyle Rises for 11th Consecutive Day
32. ZOZO’s FY24 Q3 Earnings Beat
Enterprise Software / IT Services
33. DeepSeek and Japanese AI Solution Providers: A Brief Overview
34. Obic FY24 Q3 Below Consensus but Full-Year Dividend Raised
35. Obic Business Consultants FY24 Q3 Results Augur Well for Full-Year Beat
36. NRI Raises FY24 Full-Year OP Forecast, But Revises Down Sales
37. Other News & Moves That Caught Our Eye
Pharma / Healthcare
38. Eisai’s Continued Rise
39. Chugai Shares Gain +5.8% on FY24 Full-Year Results
40. Other News & Moves That Caught Our Eye
Small- / Mid-Cap Insights
41. Insource’s Solid FY25 Q1 Results
42. CUC FY24 Q3 OP +81.6% YoY, Full-Year Guidance Revised Up
43. M&A Capital Partners FY25 Q1 Solid; Full-Year Guidance Conservative
44. M&A Research Institute Battles High Hurdles and Increased Vetting
Miscellaneous / Market / Strategy / Macro
45. Should the Bank of Japan Have Raised Rates? Economic Data Read-outs on Friday [31 Jan] May Give Clues
46. Industrial Production, Retail Sales in Dec 2024 Better than Expected but Tokyo CPI Surges Again in January
47. Other News & Moves That Caught Our Eye
List of Recently Published PSA Notes & Reports
Important Disclosure Statement from Pelham Smithers Associates Limited