Games, Internet, Services Sector

Research evidence excerpt

Games, Internet, Services Sector

[Summary] Summary of Jan-Mar 2026 results and subsequent key points

◼Our investment recommendations for the console game industry toward 2H FY2026 are Konami/Capcom, Bandai Namco HD, Nintendo, in that order.

◼Heading into 1Q FY2026 results, we mainly recommend Konami, where eFootball revenue has started to show an expansion trend following the

World Cup, and Capcom, where we expect a significant increase in operating profit. After 1Q results, we mainly recommend Bandai Namco HD and

Nintendo.

◼For the internet industry, our investment recommendations are Recruit HD, Mercari, and CyberAgent, in that order.

◼For the console game industry, the key industry themes are (1) the cross-border expansion of Japanese content and IP, and (2) development

efficiency improvements through AI utilization.

◼For the internet industry, we focus on (1) revenue growth and profitability improvement through AI utilization, and (2) fintech restructuring.

Bandai Namco HD

◼The historical P/E remained above 20x during FY2023–FY2025, when trading cards drove operating profit growth.

◼There are signs of revenue expansion in trading card sales, centered on Mobile Suit Gundam, including in the North American market.

◼In the console game business, repeat sales have bottomed out, recognition of large valuation losses is also limited, and pipeline improvement is

expected from 2Q FY2026 onward.

Nintendo

◼We focus on the improvement in the operating profit base driven by the expansion of third-party titles and repeat sales. However, the surge in

semiconductor prices and delays in first-party title releases were unexpected.

◼The slowdown in the first-party title release pace is due to (1) increased development workload driven by Switch 2’s higher specifications and support