Sega Sammy's Results and Management Guidiance Missed Expectations, but Shares Are Undervalued

We think Sega Sammy is now seeing new opportunities through the globalization of its well-established intellectual property, or IP, with expanding platforms and markets. In addition, the acquisition of Rovio has also helped to expand its IP library, providing positive synergy in growing its mobile game business, and expanding its global presence. We expect all of this to improve Sega’s competitiveness and growth outlook. Coupled with the solid operation and decent profitability at Sammy’s pachinko and pachislot machine business, this should allow it to generate economic profit well into the future, unlocking the company’s long-term value.