Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Nintendo will release its Q2 financial results this Tuesday, and we forecast operating profit (OP) to come in at ¥54 billion</li>
<li>We expect Nintendo may revise its full year guidance downward to reflect softer demand for Switch hardware.</li>
<li>In the short term, however, a bearish stance may be prudent, especially if Q2 results disappoint and Nintendo refrains from disclosing a Switch 2 timeline</li>
</ul>


Nintendo will release its Q2 financial results this Tuesday, and we forecast operating profit (OP) to come in at ¥54 billion
We expect Nintendo may revise its full year guidance downward to reflect softer demand for Switch hardware.
In the short term, however, a bearish stance may be prudent, especially if Q2 results disappoint and Nintendo refrains from disclosing a Switch 2 timeline


<ul>
<li>Nintendo reported Q3 net revenue of JPY 277 billion, down 17% year-over-year</li>
<li>Switch hardware unit sales totalled 2.6 million, down 10% YoY, although a sequential improvement of 0.5 million units was seen due to special bundles</li>
<li>We believe the Switch 2 will be a higher-specification refresh of the existing model rather than a transformative product.</li>
</ul>


Nintendo reported Q3 net revenue of JPY 277 billion, down 17% year-over-year
Switch hardware unit sales totalled 2.6 million, down 10% YoY, although a sequential improvement of 0.5 million units was seen due to special bundles
We believe the Switch 2 will be a higher-specification refresh of the existing model rather than a transformative product.


Nintendo (7974) | Q3 Results and the Road to Switch 2

Tracking developments across tech supply chains, Tech Supply Chain Tracker

Tech Supply Chain Tracker

Tracking developments across tech supply chains

<ul><li>Acer's subsidiaries are driving growth, providing resilience and optimism in the face of shifts in the PC market.</li><li>China's smartphone industry is experiencing a boom in the second quarter of 2024, indicating strong potential for growth.</li><li>A potential US ban on Chinese vehicle technology could deepen the technology rift with lasting effects, impacting various industries.</li></ul>

Acer's subsidiaries are driving growth, providing resilience and optimism in the face of shifts in the PC market.China's smartphone industry is experiencing a boom in the second quarter of 2024, indicating strong potential for growth.A potential US ban on Chinese vehicle technology could deepen the technology rift with lasting effects, impacting various industries.

Tech Supply Chain Tracker (09-Aug-2024): Acer subs drive growth, boost resilience amid PC changes.

<ul>
<li>Nintendo missed Q1 with Operating income coming in at Y54.5b (-71% YoY) vs our estimate Y116b and the street at Y94b</li>
<li>Switch 2 hardware and software units sold are now suffering from buyer fatigue as consumers await the next-gen console</li>
<li>The stock will likely fall quite sharply over the next week. Looking for good buying opportunity in anticipation of the next console cycle</li>
</ul>


Nintendo missed Q1 with Operating income coming in at Y54.5b (-71% YoY) vs our estimate Y116b and the street at Y94b
Switch 2 hardware and software units sold are now suffering from buyer fatigue as consumers await the next-gen console
The stock will likely fall quite sharply over the next week. Looking for good buying opportunity in anticipation of the next console cycle


<ul>
<li>Operating profit: FY3/24 OP was 529 billion yen (+4.9% YoY) vs analyst estimates of 537 billion (1.5% miss)</li>
<li>FY3/25 Operating guidance is 400 billion yen, significantly below analyst expectations of 480 billions (-16% miss).</li>
<li>The initial market reaction may be negative, we would use that as an opportunity to buy into the stock for the cyclical upturn in FY3/26.</li>
</ul>


Operating profit: FY3/24 OP was 529 billion yen (+4.9% YoY) vs analyst estimates of 537 billion (1.5% miss)
FY3/25 Operating guidance is 400 billion yen, significantly below analyst expectations of 480 billions (-16% miss).
The initial market reaction may be negative, we would use that as an opportunity to buy into the stock for the cyclical upturn in FY3/26.


Nintendo (7974) | Negative Surprise....Not Really

Japan

Nintendo Co., Ltd. develops, manufactures, and sells household leisure equipment. The Company produces home use video game hardware and software products. Nintendo markets its products throughout Japan.

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Nintendo (NTDOY US)

Nintendo (7974) | Q2 Earnings Preview

Nintendo's Q2 financial results expected to show ¥54 billion operating profit, but full year guidance may be revised down due to softer Switch...

Mark Chadwick

Nintendo (7974) | Q3 Results and the Road to Switch 2

Nintendo's Q3 net revenue down 17% YoY, Switch hardware sales down 10% YoY but up sequentially due to special bundles. Switch 2 expected to be a...

Mark Chadwick

Tech Supply Chain Tracker (09-Aug-2024): Acer subs drive growth, boost resilience amid PC changes.

Acer's subsidiaries grow amid PC market changes, China's smartphone market booms, potential US ban on Chinese vehicle tech, Nintendo and Sony face...

Tech Supply Chain Tracker

Nintendo (7974) | Game Over for Switch

Nintendo's Q1 operating income missed estimates, with Switch sales slowing due to buyer fatigue. Stock expected to drop, but potential buying...

Mark Chadwick

Nintendo (7974) | Negative Surprise....Not Really

Nintendo to Report Q1 (02 Aug); Shares Up 4% Since FY3/24 Results First Quarter - Operating income estimate Y116b vs street Y94b - Net sales...

Mark Chadwick

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Nintendo (7974) | Q2 Earnings Preview

​Nintendo's Q2 financial results expected to show ¥54 billion operating profit, but full year guidance may be revised down due to softer Switch...

Mark Chadwick

Nintendo (7974) | Q3 Results and the Road to Switch 2

​Nintendo's Q3 net revenue down 17% YoY, Switch hardware sales down 10% YoY but up sequentially due to special bundles. Switch 2 expected to be a...

Mark Chadwick

Tech Supply Chain Tracker (09-Aug-2024): Acer subs drive growth, boost resilience amid PC changes.

Acer's subsidiaries grow amid PC market changes, China's smartphone market booms, potential US ban on Chinese vehicle tech, Nintendo and Sony face...

Tech Supply Chain Tracker

Nintendo (7974) | Game Over for Switch

​Nintendo's Q1 operating income missed estimates, with Switch sales slowing due to buyer fatigue. Stock expected to drop, but potential buying...

Mark Chadwick

Nintendo (7974) | Negative Surprise....Not Really

Nintendo to Report Q1 (02 Aug); Shares Up 4% Since FY3/24 Results First Quarter - Operating income estimate Y116b vs street Y94b - Net sales...

Mark Chadwick

Nintendo's Q2 financial results expected to show ¥54 billion operating profit, but full year guidance may be revised down due to softer Switch...

Nintendo's Q3 net revenue down 17% YoY, Switch hardware sales down 10% YoY but up sequentially due to special bundles. Switch 2 expected to be a...

Nintendo's Q1 operating income missed estimates, with Switch sales slowing due to buyer fatigue. Stock expected to drop, but potential buying...