---
endpoint: analytics
pattern: Technology
status: done
latency_ms: 195230
conversation_id: b8f961ed-e105-4318-a9c2-10d6d6d07bbc
citations: 0
created: 2026-05-31 20:32:47Z
---

# Is CLSA incrementally more positive/negative on Sony Group. If so, why?

**CLSA on Sony Group (6758) — Net incrementally MORE NEGATIVE over the past 6 weeks, despite an unchanged O-PF rating and ¥4,000 target price.**

Coverage is by **Amit Garg (Singapore) and Yu Yoshida (Tokyo)** — i.e., CLSA parent, not CLST. The rating headline ("O-PF maintained, TP ¥4,000") looks static, but the underlying tone has decisively deteriorated. The arc tells the story:

## CLSA's Sony note trajectory

| Date | Title | Action | Net incremental signal |
|---|---|---|---|
| **7 May 2025** | "Short-term correction" | **TP CUT ¥4,500 → ¥4,000**; FY3/26 OP cut ¥140bn to ¥1,370bn (flat YoY); FY3/27 OP cut ¥40bn to ¥1,530bn [9] | **Negative** |
| **14 May 2025** | "Departure from its format" | TP ¥4,000 reiterated; FY3/26 guidance "slightly ahead" of CLSA, MRP cashflow target raised ¥300bn to ¥4.8tn, ¥1.3tn capital returns planned, FS spin-off board-approved [13][14] | **Mildly positive offset** |
| **15 Jun 2025** | "Business briefings" | TP ¥4,000 reiterated; I&SS outlook "more challenging" — 60% market-share target now delayed; ROIC running 10–13% vs 20% MRP target [5][4] | **Negative** |
| **18 Jun 2025** | "Semiconductor meeting" | TP ¥4,000 reiterated; **CLSA calls for Sony to formulate an EXIT STRATEGY from semiconductors ahead of the 6th MRP** [1][2]; CLSA FY3/26 EPS now sits at just **82% of consensus** [6] | **Negative** |

## Why the tone has turned more negative

**1) Imaging & Sensing Solutions (I&SS) — the dominant new bear case.**
- This is the single biggest mood-shift across the four notes. By the 18 June meeting, CLSA's language escalated from "more challenging" to a structural call: "we believe ultimately Sony needs to formulate an exit strategy ahead of the 6th MRP." [1]
- The reasons cited: I&SS has ~65% sales exposure to a single US maker (Apple); this drives high capex with "unclear returns" to maintain the technology lead. The "fab-light" pivot lowers capital risk but "significantly lowers returns." [1][2]
- Sony itself **lowered its I&SS ROIC target to 12–15% from 20%** in the 5th MRP — and current ROIC is running 10–13%. CLSA reads this as a structural impairment of the unit's value contribution. [4][2]
- On 7 May, CLSA had already cut FY3/26 I&SS OP from ¥257bn (FY3/25) to ¥228bn (vs. prior ¥312bn) on a ¥140/$ assumption and –5% iPhone 17 units. [11]

**2) Game & Network Services (G&NS) — earnings pushed out, then a brief positive surprise.**
- 7 May: CLSA cut FY3/26 G&NS OP to ¥426bn (from ¥459bn) on **GTA6 delayed to May 2026**, 145% US tariffs on China-built consoles forcing PS5 sales down 22% to 15m units, –9% 3P software, –1m PS Plus subs and –8% add-on content. [10]
- 14 May: Sony's own FY3/26 guide of ¥480bn G&NS OP (+¥65bn vs. CLSA, 11.2% OPM, no tariff impact) was "unexpectedly strong" — but CLSA flagged Sony's assumptions as "optimistic," noting 15m PS5 units "is no easy target" given only three months of US inventory and that "it is highly uneconomical to sell consoles in the USA even with a revised tariff structure." [15]
- Note the dynamic: even when management guided BETTER, CLSA's tone was skeptical rather than bullish — they treated the guide as a 6 May-style overshoot that may not hold.

**3) Pictures / TV — weakened.**
- 7 May: CLSA cut Pictures OP growth to just +5% YoY (¥114bn FY3/26) on weak box office and TV production; flagged uncertainty from 100% US tariffs on overseas-produced films. [11]

**4) FX / macro overhang.**
- The original 7 May TP cut was anchored on a stronger yen assumption (¥140/$) and weaker iPhone 17 (–5% units, ~60% of I&SS sales). [9][11]

## The offsetting positives (why O-PF was maintained, not downgraded)

- **Financial Services IPO/spin-off** (board-approved 14 May; effective early September) — Sony will offload >80% of shares to existing shareholders and raised MRP cashflow target by ¥300bn to ¥4.8tn, with c.¥1.3tn of shareholder returns (¥250bn buyback announced). [14]
- **Music** continues to outperform — 4-yr CAGR of 15% sales / 18% adj. OP; aggressive catalogue M&A (~US$2.5bn in 2024); Sony share continuing to gain. [8]
- **Medium-term rerating thesis is INTACT** — CLSA still flags potential semiconductor spin-off (which, per the 18 June note, is now CLSA's preferred outcome) and a strong PS6 cycle (helped by Microsoft potentially de-emphasising Xbox hardware). [12]

## What this looks like in numbers

CLSA's FY3/26 EPS estimate (¥152.9) is now ~**82% of consensus**, a meaningful gap below the Street that has WIDENED across the May→June reports. [6] The PE/PB/ROE deck shows ROE compressing from 14.5% (FY3/25) to 10.7% (FY3/26CL) and dividend yield only ~0.6%. [6]

## Bottom line

CLSA is **incrementally more negative on Sony Group**, with the deterioration concentrated in the semiconductor (I&SS) business — to the point where the latest note effectively recommends Sony divest the unit. The rating and TP have held because: (a) the bear case is partially absorbed by a constructive view on capital returns and the financial-services spin-off; (b) the medium-term rerating thesis (semis exit + PS6 cycle) is *strengthened* by the I&SS pessimism, not weakened. But the direction-of-travel since the 7 May TP cut is clearly negative, and CLSA's earnings stand ~18% below consensus for FY3/26 [6] — they are explicitly out-of-consensus to the downside.

---
**Sources**
[1] Sony Group - O-PF (Semiconductor meeting) — CLSA, 18 June 2025 (607962284LinqAlpha.PDF)
[2] Sony Group - O-PF (Semiconductor meeting) — CLSA, 18 June 2025 (607962284LinqAlpha.PDF)
[3] Sony Group - O-PF (Semiconductor meeting) — CLSA, 18 June 2025 (607962284LinqAlpha.PDF)
[4] Sony Group - O-PF (Business briefings) — CLSA, 15 June 2025 (607962001LinqAlpha.PDF)
[5] Sony Group - O-PF (Business briefings) — CLSA, 15 June 2025 (607962001LinqAlpha.PDF)
[6] Sony Group - O-PF (Semiconductor meeting) — CLSA, 18 June 2025 (607962284LinqAlpha.PDF)
[7] Sony Group - O-PF (Business briefings) — CLSA, 15 June 2025 (607962001LinqAlpha.PDF)
[8] Sony Group - O-PF (Business briefings) — CLSA, 15 June 2025 (607962001LinqAlpha.PDF)
[9] Sony Group - O-PF (Short-term correction) — CLSA, 7 May 2025 (607958248LinqAlpha.PDF)
[10] Sony Group - O-PF (Short-term correction) — CLSA, 7 May 2025 (607958248LinqAlpha.PDF)
[11] Sony Group - O-PF (Short-term correction) — CLSA, 7 May 2025 (607958248LinqAlpha.PDF)
[12] Sony Group - O-PF (Short-term correction) — CLSA, 7 May 2025 (607958248LinqAlpha.PDF)
[13] Sony Group - O-PF (Departure from its format) — CLSA, 14 May 2025 (607959430LinqAlpha.PDF)
[14] Sony Group - O-PF (Departure from its format) — CLSA, 14 May 2025 (607959430LinqAlpha.PDF)
[15] Sony Group - O-PF (Departure from its format) — CLSA, 14 May 2025 (607959430LinqAlpha.PDF)

