PEC’s Japan strategy:Tech,Japan &asset impairment

Sitting next to Damian Thong, our regional sector head of tech, every day is filledlistening to the multiple headwinds faced by global hardware tech companies(pages 19-28). In addition, Japan’s companies are often conglomerates facingnimble global competitors, making them highly vulnerable to earningsdisappointments, and large asset impairment charges.

The pain at Sharp (6753 JP, Not Rated) and Toshiba (6502 JP, ￥168, Neutral,TP: ￥180) has been intense.

Damian’s coverage and recommendations are on pages 9-12. Damian’s big captop picks are currently Panasonic (6752 JP, ￥887, Outperform, TP: ￥1,635) andMitsubishi Electric (6503 JP, ￥1,057, Outperform, TP: ￥1,480).

Large exceptional and extraordinary charges are a mounting concern forinvestors. Please note the collapse in net profit company guidance highlighted inblue below. We examine Damian’s coverage and the just completed resultsseason to assess the risks.