Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>FY3/26 results missed expectations modestly, while FY3/27 guidance disappointed sharply: OP guided at ¥370bn versus ¥480bn consensus, driven mainly by weaker Switch 2 assumptions.</li>
<li>Hardware guidance implies Switch 2 unit sales around 4m below expectations, likely reflecting price hikes, weaker demand assumptions, and management caution around supply and margins.</li>
<li>Software guidance is the bigger concern: 60m units imply weak tie-rates and a thin FY3/27 pipeline, though stronger releases could drive meaningful FY3/28 earnings recovery.</li>
</ul>


FY3/26 results missed expectations modestly, while FY3/27 guidance disappointed sharply: OP guided at ¥370bn versus ¥480bn consensus, driven mainly by weaker Switch 2 assumptions.
Hardware guidance implies Switch 2 unit sales around 4m below expectations, likely reflecting price hikes, weaker demand assumptions, and management caution around supply and margins.
Software guidance is the bigger concern: 60m units imply weak tie-rates and a thin FY3/27 pipeline, though stronger releases could drive meaningful FY3/28 earnings recovery.


Nintendo (7974) | FY3/27 Guidance Disappoints as Switch 2 Assumptions Reset Lower

<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

<ul>
<li>
 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.</li>
<li>
 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.</li>
<li>
 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.</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.


Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>Global Ex-USA funds have almost eliminated a decade-long Japan underweight, lifting average exposure to 13.64%, just 0.22% below benchmark.</li>
<li>Japan has seen strong rotation in 2026, with an estimated $3.8bn of net inflows and broadening ownership across Industrials, Financials and Materials.</li>
<li>Stock selection is shifting towards semiconductors and industrial technology, led by Kioxia, Advantest and Sumitomo Electric, while established holdings including Nintendo and Sony lose ground.</li>
</ul>


Global Ex-USA funds have almost eliminated a decade-long Japan underweight, lifting average exposure to 13.64%, just 0.22% below benchmark.
Japan has seen strong rotation in 2026, with an estimated $3.8bn of net inflows and broadening ownership across Industrials, Financials and Materials.
Stock selection is shifting towards semiconductors and industrial technology, led by Kioxia, Advantest and Sumitomo Electric, while established holdings including Nintendo and Sony lose ground.


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

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) | FY3/27 Guidance Disappoints as Switch 2 Assumptions Reset Lower

Weak hardware and software forecasts drove a sizeable OP miss, though margin concerns may already be reflected after the stock’s sharp six-month...

Mark Chadwick

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

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

Japan: Underweight No More?

Global Ex-USA funds have almost eliminated their decade-long Japan underweight, as rising allocations and strong inflows drive rotation towards...

Steven Holden

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

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52-week Range

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Nintendo (7974) | FY3/27 Guidance Disappoints as Switch 2 Assumptions Reset Lower

Weak hardware and software forecasts drove a sizeable OP miss, though margin concerns may already be reflected after the stock’s sharp six-month...

Mark Chadwick

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

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

Japan: Underweight No More?

Global Ex-USA funds have almost eliminated their decade-long Japan underweight, as rising allocations and strong inflows drive rotation towards...

Steven Holden

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

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