Nintendo

Sold something for a little speculation. Position is actually still a little too large anyway.

Nintendo Q3 2024 $7974 (+1.38%)

Financial performance

In the first half of fiscal year 2025, Nintendo recorded a drastic decline in net sales of 34.3% to 523.2 billion yen. Operating profit fell by 56.6% to 121.5 billion yen, while ordinary profit fell by 61.3% to 147.1 billion yen. Net profit fell by 59.9% to 108.6 billion yen.

Balance sheet overview

Total assets decreased by 80.0 billion yen and amounted to 3,071.3 billion yen as at September 30, 2024. Total liabilities decreased by 14.3 billion yen to 532.0 billion yen, while equity decreased by 65.6 billion yen to 2,539.3 billion yen.

Income overview

• Cost of goods sold: 205.4 billion yen
• Gross profit: 317.9 billion yen
• Administrative and selling expenses: These increased by 2.2% to 196.4 billion yen.

Key figures and profitability ratios

The operating profit margin fell by 12.0 percentage points to 23.2%. The net profit margin also fell by 13.3 percentage points to 20.8%.

Segment information

• Sales from specialized video game platforms fell by 34.1% to 485.2 billion yen.
• Revenues from mobile and IP-related businesses decreased by 43.3% to 31.2 billion yen.

Competitive position

The Nintendo Switch platform is facing challenges as it is in its eighth year of life, resulting in significant declines in hardware and software sales.

Forecasts and comments from management

Forecasts have been revised downwards: Net sales forecast is now 1,280.0 billion yen and operating income is now 360.0 billion yen for fiscal year 2025. Sales expectations for Nintendo Switch hardware have been lowered to 12.5 million units and for software to 160.0 million units.

Risks and opportunities

Risks: The continuing depreciation of the yen is having a negative impact on spending in foreign currencies.

Opportunities: New software releases and the potential for increased user loyalty for existing titles.

Summary

Nintendo faced significant challenges in the first half of FY2025, reflected in a significant decline in sales and profitability metrics. The company has adjusted its forecasts downwards, reflecting the ongoing difficulties in the market and the maturity of the Nintendo Switch platform. Despite these challenges, Nintendo remains committed to leveraging new software releases and maintaining consumer loyalty to stabilize and potentially expand its market position.

Positive aspects

• Gross profit margin improvement: Despite a decline in gross profit, the gross profit margin increased by 1.5 percentage points to 60.8%. This is due to a higher proportion of digital sales and a decrease in the proportion of less profitable hardware sales.
• Increase in interest income: Interest income increased significantly to 30.8 billion yen, which helped to cushion some of the negative impact of foreign exchange losses.
• Stable sales of evergreen titles: Games such as Mario Kart 8 Deluxe continue to perform well and contribute to stable sales figures for older titles.
• Share of digital sales: The share of digital sales increased by 6.1 percentage points to 56.3%, indicating a trend towards more profitable digital distribution channels.
• Investment in research and development: Spending on research and development increased by 15.5%, underlining the company's commitment to innovation and the development of future products.

Negative aspects

• Significant decline in net sales: Net sales decreased by 34.3% year-on-year to 523.2 billion yen, indicating a significant decline in revenue.
• Decline in operating income: Operating income fell 56.6% to 121.5 billion yen, due to decreased sales and rising selling, general and administrative (SG&A) expenses.
• Foreign exchange losses: The company recorded foreign exchange losses of 22.4 billion yen, which had a significant negative impact on ordinary profit.
• Decline in hardware and software sales: Nintendo Switch hardware sales decreased by 31.0%, while software sales decreased by 27.6%, highlighting the challenges in maintaining sales momentum.
• Decline in net profit: Net profit decreased 59.9% to 108.6 billion yen, highlighting the overall decline in profitability.

Earnings summary this morning (05.11.) 👇🏼

Krones | $KRN (+1.76%) increases both sales and operating profit in the third quarter, with EBITDA growing by almost 22% to almost 135 million euros. The company confirms its forecast and benefits from improved material availability.

Uniper | $UN01 generates a profit of just under EUR 1.3 billion in the first nine months of 2024, but significantly less than in the previous year. The energy group confirms its outlook for the year with an expected net profit of EUR 1.1 to 1.5 billion.

Hugo Boss | $BOSS (-2.36%) recorded a slight increase in sales of 1% to 1.03 billion euros in the third quarter despite a slump in consumption in China, but EBIT fell by 7% to 95 million euros. The Group confirms its annual targets despite higher sales and marketing costs.

Fraport | $FRA (-1.27%) is lowering its expectations for passenger numbers in 2024 to the lower end of the range of 61 million passengers and is targeting EBITDA in the middle of the previous forecast of 1.26 to 1.36 billion euros. In the summer quarter, revenue rose by 11%, while operating profit only increased by 1%.

Fresenius Medical Care | $FRE (+2.55%) increases operating profit in the third quarter by 43 % to 463 million euros, which is attributable to successful cost savings. The company raises its forecast for adjusted operating profit, but expects a slight decline in sales.

Redcare Pharmacy | $RDC (-3.11%) reports a decline in adjusted EBITDA to 11.4 million euros in the third quarter and increases the loss for the first nine months to 20.1 million euros. The company confirms adjusted annual targets and expects a lower operating profit due to higher advertising expenditure for the e-prescription.

DHL | $DHL (-0.87%) reports a decline in profit of almost 7% to 751 million euros for the third quarter and lowers its forecast for operating profit in 2024 and 2026. Revenue increases by 6% to 20.6 billion euros, while EBIT remains stable at 1.4 billion euros.

Norma Group | $NOEJ (-0.17%) is revising its annual targets downwards and now expects sales of around EUR 1.2 billion and an adjusted EBIT margin of around 8.0 percent due to a challenging market environment. In the third quarter, the company recorded a decline in sales of 7.9% to 273.6 million euros and a drop in profit to 6.1 million euros.

Nintendo | $7974 (+1.38%)
Q2 24 Earnings:

- Net Income 27.70B Yen (est 49.4B Yen)

- Sees FY Oper Income 360.00B Yen, Saw 400.00B Yen

- Sees FY Total Switch Sales 12.50M Units, Saw 13.50M

Adecco | $ADEN (-1.51%) 24 Earnings:

- Net Income EU99.0M (est EU86.8M)

- Rev EU5.70B (est EU5.84B)

- Adj EBITA EU186.0M (est EU195M)

- Plans To Repay EU430M Debt Maturing In Dec 24

I tidied up my portfolio a bit today. This has partly to do with the fact that I think the stock market is currently running a bit hot, but it's not the decisive factor; it's simply a time when it seems wise to sell some stocks that were no longer at the top of my want list anyway.

First of all, some of you may have noticed that I have switched most of the growth portfolio to ETFs. I've also tidied up a bit there, but it's not worth mentioning.

In the dividend portfolio, I shifted a little more back and forth; although initially I only shifted to the cash portfolio and not yet shifted :D Some of you may remember that I took over some of my grandparents' shares, some of which are also old tax holdings. This is also the case here. But there's no doubt that I also had to pay a lot of tax on the non-old stock. However, I also wanted to tidy up a bit, even though the dividend portfolio was actually intended for buy and hold (forever), so sometimes it turns out that you should perhaps sell after all.

$SBUX (+2.42%) I had started to build up a position at around 85. Then came the Starbucks "crash". This forced me to buy some more. However, the position has become far too large for my dividend portfolio, so I reduced it by a little more than 1/2.

$SAP (+0.95%)
@Karl_ <- Following on from Karl's post. I have a similar view and think that the valuation is no longer really justified. I am also unsure about the German market as a whole at the moment. But after all, SAP also does a lot of business in America. 100% out

$JPM (+2.19%) Perhaps a controversial decision. But I'm not entirely convinced by JPM's return on capital, even for a bank. It is certainly a good investment, but not for me at the moment. But that's more of a gut decision. 100% out

$DHL (-0.87%)
$7974 (+1.38%) were mini positions. Question: Continue to build up or get out? The latter was the answer. I don't see an absolute reason to buy at the moment. 100% liquidated

$JNJ (+2.5%) certainly also a controversial decision. However, I am not convinced by either the performance or the fundamentals. 100% out.

$AZN (+1.64%) Bought Corona for a good reason (vaccination). Now took profits. 100% out.

That's it for now. I now have a cash ratio of almost 50%, which is of course far too much. The cash will flow partly into ETFs in the former growth portfolio and partly into dividend stocks. The main focus will be on consumer staples, industrials and healthcare - if better opportunities arise there. I will gradually build up positions there and post my reasons accordingly.

Edit: I am always grateful for ideas in consumer staples/industrials/healthcare + dividend paying.

The Nintendo
$7974 (+1.38%) shares are up in Japanese trading 🇯🇵 after a high-ranking representative of the Saudi Arabian 🇸🇦 sovereign wealth fund told local media that a increase holdings in Japanese 🇯🇵 gaming companies is being considered - Bloomberg

🐺 CD Projekt: Of sorcerers and cyberpunks - the masters of digital worlds 🏙️ Part 1:https://getqu.in/dYjIcI/

Current $CDR (+0.74%) Projekt has the second-best shareholder yield among providers, even if this is quite small.

CD Projekt's payout ratio is relatively low and therefore still has plenty of room to increase.

The dividend is around USD 0.30 per share

CD Projekt's return on invested capital (ROIC) is twice as high as that of most of its competitors and, at more than 10 %, also exceeds the important threshold.

CD Projekt's return on equity (ROE) is also above 10 % and is the best in the industry.

The situation is similar for return on capital employed (ROCE), which is also above 10 % and is the best indicator in the industry.

Conclusion

With CD Projekt, you are not only supporting some of the best games in the world, but also a first-class European games producer. The capital structure and valuation speak for themselves, and the share is one of the best valued in comparison. Although there have been mistakes in the past, the company has learned from these experiences and is now firmly back in contact with the community. Irrespective of this, it is still well managed.

Although CD Projekt has few but strong IPs, game development looks promising. If you want to invest in the industry, there are really only four options, three of which are not pure game producers ($MSFT (+0.08%) , $7974 (+1.38%) and $6758 (-0.58%) ). If you are looking for a pure gaming provider, CD Projekt is clearly the first choice and shows the greatest potential. As a fan of games, I am all the more pleased that I can invest in a company without having to rely solely on my emotions, and I am therefore happy to buy again when the price reaches 30- 36 euros.

again with Nintendo :)

Nintendo has thus shrunk back to its desired size. I fully believe in the stock, but just under 20% was simply too much for me. As soon as Apple is reduced, Nintendo will be my largest single position. Followed by Pepsi and Apple

New in the portfolio, my 2nd position from Japan.

Let the fun begin around the games... (or something like that)

Nintendo reduced by half