By Virginia Harrison, MarketWatch
SYDNEY (MarketWatch) — Japan is on track for an early victory at the London Olympics, as photographers rush to buy top-end cameras, expected to give battered Japanese electronics firms a much-needed boost.
Nomura strategist Tetsuya Wadaki says demand for single reflex lens (SLR) devices will jump as global news-media professionals, among others, upgrade in time for the London games.
“The first half of 2012 is likely to be a season of strong sales of high-end SLR kit used by media photographers in the lead up to the London Olympics,” Wadaki wrote in a research report.
Nikon Corp. (TKS:JP:7731) (OTC:NINOY) and Canon Inc. (TKS:JP:7751) (NYS:CAJ) are the dominant SLR players. Louis Capital Markets’ head of Japanese equities Ben Collett said SLR devices have driven these stocks in the past, and the Games could lift sales.
“It’s a similar theme to the World Cup driving demand for 3D televisions, but this is definitely more sound, given the unit cost,” Collett said.
It would come as some relief for the export-focused industry, which has been saddled by a soaring yen and slowing global economy, while some struggle for supplies after massive floods hit manufacturing plants in Thailand.
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Data released from the Camera & Imaging Products Association this month revealed a sharp drop in digital-camera shipments during November 2011, compared to a year earlier.
Global shipment volumes plunged, with falls particularly steep in Europe and the Americas. Japanese digital camera exports dropped 36%.
“The digital-camera market has been starved of supplies owing to flood damage at plants in Thailand belonging to Nikon, Sony [Corp. (TKS:JP:6758) (NYS:SNE) ] and shutter manufacturers,” Nomura’s Wadaki said.
“The 2011 Christmas shopping season ended on a sour note for Nikon, Canon, and Sony,” he said.
But a stream of new devices expected to come to market this year may tempt some consumers .
“It’s [largely] about consumer discretionary demand with these kinds of products, and the life cycle,” Louis Capital’s Ben Collett said. “Canon and Nikon have been pretty good at updating their whole product range.”
Canon plans to launch two high-end cameras in March, according to Nomura’s Wadaki, while Nikon is also focused on product development “in time for this shopping season.”
In the compact camera market, Panasonic Corp. (TKS:JP:6752) , Sony and Olympus Corp. (TKS:JP:7733) (OTC:OCPNY) are among the leading names vying for market share.
Nomura’s Wadaki said that Panasonic has “won plaudits for its designs and has also been successful in making its cameras smaller,” while Sony seeks to differentiate on image quality.
Ricoh Co. (TKS:JP:7752) (OTC:RICOY) and Nikon, meantime, “have been struggling with their products” in the compact market.
“Despite Nikon’s brand clout, it has not been able to make its products a hit in Japan, but while it does not rank in the top three of manufacturers in this category, it appears to have made gradual market-share gains,” Wadaki said.
But CLSA strategist Christian Dinwoodie points to strong demand signals across Asia for the camera sector.
“Rising wealth levels, increased travel, conspicuous consumption and social-networking picture-and-video sharing are driving digital SLR demand in Asia ex-Japan,” Dinwoodie wrote in a research report.
He identifies Nikon, Canon and Tamron Co. (TKS:JP:7740) as the major beneficiaries of growing interest in photography.
Dinwoodie expects the interchangeable-lens camera market to grow 30% in 2012, driven by “emerging-market demand growth, as well as entry level digital SLR … enticing former compact-camera users to trade up.”
The sector is looking for a brighter year than the last.
Shares in Canon lost 19% in 2011 and Ricoh plunged 44%, while Nikon managed a 4% gain a Tamron added 10%.
Other leading electronics firms with camera exposure fared worse in 2011: Casio Computer Co. (TKS:JP:6952) (OTC:CSIOY) lost 29%, Panasonic slumped 43%, and Sony tumbled 53%.
Meanwhile, Olympus has been dominating headlines after the firm admitted to covering up massive investment losses. The scandal sent shares in a tailspin, losing nearly 60% of their value last year.
Olympus has filed lawsuits against 19 current and former executives, reports Tuesday said, seeking billions of yen in compensation as the fallout from the scandal continues to deepen. See report on Olympus lawsuits.