Video Game Sector: Lessons from Results
We are positive about prospects for the Video Game sector and have identified several companies within the sector which continue to offer both value and growth: we rank the stocks according to our preference. Considering this latest set of quarterly results, we identify several key issues to consider with regard to trends in the industry and individual winners and losers. These include:
- Valuations matter
- Everything is so much easier on mobile
- However, you do need IP
- Pokémon Go did impact the mobile market over the summer
- China is a call option
- Movies aren’t as important as games
- Switch needs to replace 3DS as well as WiiU – and therein lies the difficulty – VR is starting to register
- PlayStation Plus is the real goldmine
To end this report, a spotlight on Square Enix (SQE, 9684). When the 3Q results were released, we were nervous not just that our FY16 OP target of ¥36bil was too high, but that our FY17 OP target of ¥40bil would be too. In light of the FF15 Mobile launch, the FY17 OP target looks possible, but we are revising down our FY16 OP target by ¥3bil. Based on our new FY16 OP forecast, SQE is trading on an undemanding EV/OP of 9.0x, but it is not as eye-catchingly cheap as it might (and perhaps ought to) have been.
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.