Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Nintendo FY3/26 results due 8 May; guidance unchanged at ¥2,250bn sales (+93%) and ¥370bn OP (+31%), with Q4 OP expected around ¥70bn (+100% YoY).</li>
<li>Q4 likely sees strong Switch 2 volumes, but weaker hardware margins may pressure profitability; higher memory costs could push hardware gross margins into single digits.</li>
<li>FY3/27 forecast: ¥2,560bn sales and ~¥360bn OP; focus on pricing, margins, and software demand. Consensus ¥480bn OP—guidance near this would drive positive reaction.</li>
</ul>


Nintendo FY3/26 results due 8 May; guidance unchanged at ¥2,250bn sales (+93%) and ¥370bn OP (+31%), with Q4 OP expected around ¥70bn (+100% YoY).
Q4 likely sees strong Switch 2 volumes, but weaker hardware margins may pressure profitability; higher memory costs could push hardware gross margins into single digits.
FY3/27 forecast: ¥2,560bn sales and ~¥360bn OP; focus on pricing, margins, and software demand. Consensus ¥480bn OP—guidance near this would drive positive reaction.


Nintendo (7974) | Strong Volumes, Margin Questions to Dominate

Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<div><ul><li>The liquid renewable fuels sector has entered 2H26 in the strongest position it has occupied in years. </li><li>Margins across renewable diesel (RD), biodiesel, sustainable aviation fuel (SAF), and low-carbon ethanol are running near multi-year highs, balance sheets are healthier, and carbon credit revenue is maturing into a durable earnings stream that stands apart from physical fuel.</li><li>In this report, we walk through the five most resounding themes from companies’ interim results and recent WTR events, illustrated with company-level evidence and near-term catalysts with our thoughts on what we’re watching in the coming weeks for investors to follow.</li></ul></div>

The liquid renewable fuels sector has entered 2H26 in the strongest position it has occupied in years. Margins across renewable diesel (RD), biodiesel, sustainable aviation fuel (SAF), and low-carbon ethanol are running near multi-year highs, balance sheets are healthier, and carbon credit revenue is maturing into a durable earnings stream that stands apart from physical fuel.In this report, we walk through the five most resounding themes from companies’ interim results and recent WTR events, illustrated with company-level evidence and near-term catalysts with our thoughts on what we’re watching in the coming weeks for investors to follow.

WTR Circular Carbon Focus Report : Five Key Themes Driving Liquid Renewable Fuels

<ul>
<li>
<strong> Software Surprise</strong>: Pokétopia’s record launch (2.2m units) establishes a high-margin "evergreen" pillar, potentially contributing ¥175bn lifetime EBIT to offset rising hardware costs and cyclical volatility.</li>
<li>
<strong> Margin Compression</strong>: Surge in memory prices pushes SW2 BoM to $400, creating a valuation headwind. Our ¥415bn EBIT forecast sits well below the Street’s bullish expectations.</li>
<li>
<strong> Valuation Discipline</strong>: At 20x EV/EBIT, the market prices in structural IP shifts. Our DCF fair value of ¥9,500 suggests limited upside ahead of May’s guidance.</li>
</ul>



 Software Surprise: Pokétopia’s record launch (2.2m units) establishes a high-margin "evergreen" pillar, potentially contributing ¥175bn lifetime EBIT to offset rising hardware costs and cyclical volatility.

 Margin Compression: Surge in memory prices pushes SW2 BoM to $400, creating a valuation headwind. Our ¥415bn EBIT forecast sits well below the Street’s bullish expectations.

 Valuation Discipline: At 20x EV/EBIT, the market prices in structural IP shifts. Our DCF fair value of ¥9,500 suggests limited upside ahead of May’s guidance.


Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>Aequitas Research's weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.</li>
<li>On the IPO front, a number of deals are set to list in the coming week.</li>
<li>On the placement front, Nintendo's placement appears to be shaping up fine.</li>
</ul>


Aequitas Research's weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, a number of deals are set to list in the coming week.
On the placement front, Nintendo's placement appears to be shaping up fine.


Aequitas ECM Weekly (9 March 2026)- Nintendo, Mixue, PayPay, UI Boustead, Sunway, Zhaowei, Estun

<ul>
<li>Nintendo’s share price fell ~1/3 in six months due to rising memory costs pressuring Switch 2 hardware margins.</li>
<li>Hardware sets installed-base size, but software drives most profits; lifetime tie ratio likely remains ~10 games per console.</li>
<li>Durable franchises like Mario/Zelda provide long-term resilience; next cycle may not be far more profitable than the last, but hardware headwinds are already priced in.</li>
</ul>


Nintendo’s share price fell ~1/3 in six months due to rising memory costs pressuring Switch 2 hardware margins.
Hardware sets installed-base size, but software drives most profits; lifetime tie ratio likely remains ~10 games per console.
Durable franchises like Mario/Zelda provide long-term resilience; next cycle may not be far more profitable than the last, but hardware headwinds are already priced in.


Nintendo: Hardware Headwinds, Software Lifeline

Japan

Nintendo Co., Ltd. globally develops, manufactures and sells home-use video game hardware and software in home entertainment business.  The company also produces home-game products including cards.

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Nintendo (7974 JP)

Nintendo (7974) | Strong Volumes, Margin Questions to Dominate

Ahead of FY3/26 results, Switch 2 momentum looks solid, but hardware costs and margin sustainability remain the key swing factors for FY3/27 outlook.

Mark Chadwick

WTR Circular Carbon Focus Report : Five Key Themes Driving Liquid Renewable Fuels

Margins across renewable diesel (RD), biodiesel, sustainable aviation fuel (SAF), and low-carbon ethanol are running near multi-year highs, balance...

Water Tower Research

Nintendo (7974): The Pokétopia Premium

Pokétopia's successful launch boosts profits, but rising hardware costs and memory prices create valuation challenges. Market optimism may be...

Mark Chadwick

Aequitas ECM Weekly (9 March 2026)- Nintendo, Mixue, PayPay, UI Boustead, Sunway, Zhaowei, Estun

Aequitas Research's weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.

Sumeet Singh

Nintendo: Hardware Headwinds, Software Lifeline

Nintendo's share price dropped due to rising memory costs affecting hardware margins, but long-term resilience intact. Hardware challenges are...

Mark Chadwick

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Nintendo (7974) | Strong Volumes, Margin Questions to Dominate

Ahead of FY3/26 results, Switch 2 momentum looks solid, but hardware costs and margin sustainability remain the key swing factors for FY3/27 outlook.

Mark Chadwick

WTR Circular Carbon Focus Report : Five Key Themes Driving Liquid Renewable Fuels

Margins across renewable diesel (RD), biodiesel, sustainable aviation fuel (SAF), and low-carbon ethanol are running near multi-year highs, balance...

Water Tower Research

Nintendo (7974): The Pokétopia Premium

​Pokétopia's successful launch boosts profits, but rising hardware costs and memory prices create valuation challenges. Market optimism may be...

Mark Chadwick

Aequitas ECM Weekly (9 March 2026)- Nintendo, Mixue, PayPay, UI Boustead, Sunway, Zhaowei, Estun

Aequitas Research's weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.

Sumeet Singh

Nintendo: Hardware Headwinds, Software Lifeline

​Nintendo's share price dropped due to rising memory costs affecting hardware margins, but long-term resilience intact. Hardware challenges are...

Mark Chadwick

Pokétopia's successful launch boosts profits, but rising hardware costs and memory prices create valuation challenges. Market optimism may be...

Nintendo's share price dropped due to rising memory costs affecting hardware margins, but long-term resilience intact. Hardware challenges are...