日本视频游戏：接受是改变的第一步？

Japan Video Gaming: Acceptance is the first step to change? A year of extremes.2026 has continued to be a frustrating year for our Japan VideoGaming coverage. While the companies we like continue to do well fundamentally, marketflows dominated by AI capex spend and geopolitical omnishambles have continued tocontribute to multiple compression… and investor sentiment bordering on resignation.This note represents our latest quarterly look at sector risk-reward, and a summary of ourtakeaways after a series of meetings with our coverage companies. Robin Zhu+852 2123 2659robin.zhu@bernsteinsg.com Charles Gou+852 2123 2618charles.gou@bernsteinsg.com Capcom and Konami taking care of business.There’s not a lot Capcom and Konamican do to turn themselves into bottlenecks in the AI capex build-out. Leaving that aside,both companies continue to execute strongly, and now trade on forward PE multiplesmeaningfully below long-term averages. Pragmata sales have exceeded targets builtinto Capcom’s guidance for new game units in FY3/27E, and an MH Wilds expansionannouncement now feels more likely than not. Konami confirmed very strong eFootballgrowth in April and May, which should signal a large Q1 beat. The debate on a post-WorldCup monetisation pull-back will continue… but strong user growth and lower platform feesbodes well for outer year growth. The pair remain our top picks in the sector. Min-Joo Kang+852 2123 2644minjoo.kang@bernsteinsg.com Hyrum Caesar+81 3 6777 6979hyrum.caesar@bernsteinsg.com Even Square Enix has found a way to sound better.Catalog growth and Switch 2version releases should help raise the floor for Square Enix earnings. Nintendo pointingto a willingless to add remake titles to the first-party cadence felt additive to hopes for a2027 rebound (with Pokémon Wind & Waves already) confirmed. We remain somewhatconcerned at how Bandai Namco plans to deliver on guidance for a jump in Digital profitsin H2 FY3/27E… but Toy & Hobby growth should continue to deliver against conservativeexpectations. Nexon will go down as one of our bigger analytical errors of 2026… thougheven here range-low PE multiples and renewed cash returns should offer some support. So you want AI ROI?A year ago, the debate across our Japan Video Gaming coveragefocused on whether these companies might be too conservative to move quickly on AIadoption. Capcom now partners with Google on AI, and speaks of cutting 3-5k hours ofhuman playtesting time to 72 hours, and 30,000 hours of autonomous AI testing hoursa month. This in turn was said to be contributing to a busier release cadence which hasbenefited Capcom’s mid-sized franchises. Other aspects of video gaming developmentwhere AI adoption has become commonplace across our coverage companies includeconcept and prototyping, localisation drafts, and the analysis of community feedback. GTA VI a… clearing event?Our tracker of 28 listed video gaming companies globallypointed to 11.3% aggregate revenue growth in the March quarter, which implied c. 4-5%annualised growth against pre-Covid baselines. Consensus projections pointing to industrygrowth acceleration into the end of 2026 are heavily influenced by the long-awaited GTAVI launch. We’ve heard every kind of bull case for GTA VI launch sales in recent months. Butwe do wonder if Godot’s arrival will represent a clearing event for our coverage companiesin Japan, both because many of them have consciously avoided the holiday 2026 launchwindow… and in terms of investor flows within global video gaming. BERNSTEIN TICKER TABLE INVESTMENT IMPLICATIONS 2026 continues to represent a challenging year for our Japan Video Gaming coverage. While companies we like, like Capcomand Konami continue to execute well, the flip side of inflows into AI capex beneficiaries has continued to drive valuation multiplede-rating across our coverage. We sympathize with the market’s AI bullishness to a large extent, but our gaming coverage nowincludes several stocks that should compound earnings at double-digit percentages for many years… while trading on forwardPE multiples that are materially below multi-year averages. Capcom and Konami remain our top picks in the sector. We consider both steady compounders that have long growth runways,which now trade on range-low forward PE multiples. Both stocks look well set-up for Q1 beats, and we expect upcomingsummer showcases to offer more clarity on their go-forward launch pipelines. Nintendo sentiment has also shown sometentative signs of at least stabilisation. The changes to our Square Enix, Nexon, Bandai Namco price targets reflect updated earnings estimates, multiplied byunchanged FY+1 PE multiples. VALUATION COMPS TABLE DETAILS LIVING UNDER THE AI CAPEX SHADOW This note represents our latest quarterly look at the Japan Video Gaming sector - taking stock of the latest high frequency data,and quarterly reporting across the industry. We’ve also taken into account full year FY3/27E guidance from the companies wec