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Equity Analyst, LightStream Research

Farha Sabri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

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<li>Sony's downsized mobile segment continues to struggle amidst increasing competition in the handset market. Sony’s market share in the global handset industry has fallen to around 1% at present from approximately 5% in 2012. Sony has seen its handset unit sales fall at a CARC of close to 30% over FY03/15-18. </li>
<li>Sony's previous phone models haven't been too much of a hit (except in the domestic market) due to a number of reasons including high prices, slower innovations in relation to competitors, and poor after sales services.</li>
<li>The company's newest phone, the XZ3, which is to be release in October, has gotten better reviews which indicate that the company is finally starting to provide innovative solutions for its handsets. Based on the reviews for the model so far, the higher price point seems justified to us.</li>
<li>The company seems finally to have realised it should use the expertise it has gained in other divisions in the design of its handsets. Sony has stated that will incorporate expertise it has in other areas such as cameras, lenses, sensors, audio, display, wireless connectivity etc. more holistically than it did in the past as part of its long-term strategy. The company expects these strategies to show positive results by 2020.</li>
<li>For the time being, we don’t think Sony can beat the present market leaders. The revival of the Mobile Communications segment will be a slow process. While the company’s immediate concerns of turning around segmental losses is important, a change in the pricing strategy and marketing strategy is also necessary to keep the segment afloat and increase market share.</li>
<li>For FY03/19, we expect a slight beat relative to the company’s forecast. We expect segmental revenue of around JPY620-625bn (compared to company forecasts of JPY610bn). We expect a lower segmental loss, approximately within the range of JPY25-27bn compared to company forecasts of JPY30bn. We expect sales units to be on par with the company estimate of 9m units for FY03/19. </li>
</ul>


Sony's downsized mobile segment continues to struggle amidst increasing competition in the handset market. Sony’s market share in the global handset industry has fallen to around 1% at present from approximately 5% in 2012. Sony has seen its handset unit sales fall at a CARC of close to 30% over FY03/15-18. 
Sony's previous phone models haven't been too much of a hit (except in the domestic market) due to a number of reasons including high prices, slower innovations in relation to competitors, and poor after sales services.
The company's newest phone, the XZ3, which is to be release in October, has gotten better reviews which indicate that the company is finally starting to provide innovative solutions for its handsets. Based on the reviews for the model so far, the higher price point seems justified to us.
The company seems finally to have realised it should use the expertise it has gained in other divisions in the design of its handsets. Sony has stated that will incorporate expertise it has in other areas such as cameras, lenses, sensors, audio, display, wireless connectivity etc. more holistically than it did in the past as part of its long-term strategy. The company expects these strategies to show positive results by 2020.
For the time being, we don’t think Sony can beat the present market leaders. The revival of the Mobile Communications segment will be a slow process. While the company’s immediate concerns of turning around segmental losses is important, a change in the pricing strategy and marketing strategy is also necessary to keep the segment afloat and increase market share.
For FY03/19, we expect a slight beat relative to the company’s forecast. We expect segmental revenue of around JPY620-625bn (compared to company forecasts of JPY610bn). We expect a lower segmental loss, approximately within the range of JPY25-27bn compared to company forecasts of JPY30bn. We expect sales units to be on par with the company estimate of 9m units for FY03/19. 


Sony Mobile: Rave Reviews for XZ3 Display Show Continuing Innovation; Profitability Still a Concern

Sony Corp

Sony Mobile: Rave Reviews for XZ3 Display Show Continuing Innovation; Profitability Still a Concern