Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Nidec's Q2 operating income beat my estimates, driven by strong small motors and appliance segments, though automotive profits underperformed</li>
<li>The automotive division is shifting focus from e-axles to broader auto parts, while improving operational efficiency through partnerships and streamlined logistics</li>
<li>Despite macro risks, Nidec remains well-positioned for long-term growth in digitalization, decarbonization, and automation, with a price target of ¥4,350</li>
</ul>


Nidec's Q2 operating income beat my estimates, driven by strong small motors and appliance segments, though automotive profits underperformed
The automotive division is shifting focus from e-axles to broader auto parts, while improving operational efficiency through partnerships and streamlined logistics
Despite macro risks, Nidec remains well-positioned for long-term growth in digitalization, decarbonization, and automation, with a price target of ¥4,350


Nidec (6594)| Q2 In-Line; Long-Term Outlook Intact

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

Thematic (Sector/Industry)

<ul>
<li>Sentiment for AI related rising with NVDA de-risked and outlook strong, despite the marginal beat.</li>
<li>Kioxia IPO pricing at $4.84bn supportive for memory ecosystem names.</li>
<li>Deere numbers and outlook for farming lifting AG machinery names - watch Kubota.</li>
</ul>


Sentiment for AI related rising with NVDA de-risked and outlook strong, despite the marginal beat.
Kioxia IPO pricing at $4.84bn supportive for memory ecosystem names.
Deere numbers and outlook for farming lifting AG machinery names - watch Kubota.


Japan Morning Connection: Risk-On for the AI Ecosystem

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>If further restructuring can be avoided, profitability should return to an acceptable level while sales growth continues. </li>
<li>The decline of EV prices has probably run its course and global demand for factory automation continues to rise despite weakness in China.</li>
<li>Projected valuations are at a 10-year low. Investor attention can now shift to economic and operating risks.</li>
</ul>


If further restructuring can be avoided, profitability should return to an acceptable level while sales growth continues. 
The decline of EV prices has probably run its course and global demand for factory automation continues to rise despite weakness in China.
Projected valuations are at a 10-year low. Investor attention can now shift to economic and operating risks.


Nidec (6594 JP): Buy into Current Decline

<ul>
<li>Nidec reported Q1 OP of ¥60b, above the consensus of ¥53b. However this also included a gain from the consolidation of Nidec PSA</li>
<li>The key earnings driver was small precision motors, which are benefiting from recovery in HDD market and new earnings from cooling systems from AI Servers</li>
<li>We revise up our full year forecasts but do not believe the share price will react strongly to the "beat." Maintain bullish view on valuations</li>
</ul>


Nidec reported Q1 OP of ¥60b, above the consensus of ¥53b. However this also included a gain from the consolidation of Nidec PSA
The key earnings driver was small precision motors, which are benefiting from recovery in HDD market and new earnings from cooling systems from AI Servers
We revise up our full year forecasts but do not believe the share price will react strongly to the "beat." Maintain bullish view on valuations


Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Last May I proposed a model for thinking about the appropriate discount of <a href="https://www.smartkarma.com/entities/bank-of-kyoto" target="_blank" data-smartkarma-citation="entities:5248:1" rel="noopener">Bank of Kyoto (8369 JP)</a> vs its giant equity portfolio and small operations. It was a sell.</li>
<li>In December, the bank changed its shareholder return ratio, which indicated less value destruction, and tighter appropriate discount. The shares rallied and discount narrowed. </li>
<li>Now the Shares Adjusted for Banking Ops Valuation have seen the discount to After-Tax Equity Portfolio Valuation widen sharply in the past 10 days. So here's the hedging model.</li>
</ul>


Last May I proposed a model for thinking about the appropriate discount of Bank of Kyoto (8369 JP) vs its giant equity portfolio and small operations. It was a sell.
In December, the bank changed its shareholder return ratio, which indicated less value destruction, and tighter appropriate discount. The shares rallied and discount narrowed. 
Now the Shares Adjusted for Banking Ops Valuation have seen the discount to After-Tax Equity Portfolio Valuation widen sharply in the past 10 days. So here's the hedging model.


Bank of Kyoto (8369) - A Complicated Risk Model Clarified

Japan

NIDEC CORPORATION is the world's leading manufacturer of small precision motors mainly used in HDD and optical disk drives. The company has extended its focus to the home appliance and automotive markets. NIDEC is active in M&A and its subsidiaries include the world's leading manufacturers of LCD panel handling robots and camera shutters.

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Nidec Corp (6594 JP)

Nidec (6594)| Q2 In-Line; Long-Term Outlook Intact

Nidec's Q2 results exceeded my expectations, with strong performance in small motors and appliances but weaker profits in automotive. Stock...

Mark Chadwick

Japan Morning Connection: Risk-On for the AI Ecosystem

AI sentiment rising with NVDA de-risked, Kioxia IPO positive for memory ecosystem names, Deere's positive outlook lifts AG machinery names like...

Andrew Jackson

Nidec (6594 JP): Buy into Current Decline

Selling at the bottom of its 10-year valuation range. Management has raised guidance after lackluster 1Q results. If further restructuring can be...

Scott Foster

Nidec (6594)| Q1 Beat, but Some One-Offs

Nidec's Q1 operating profit beat expectations, driven by small precision motors and new earnings from AI server cooling systems. FY forecasts...

Mark Chadwick

Bank of Kyoto (8369) - A Complicated Risk Model Clarified

The Bank of Kyoto (8369) model is clarified so dynamic hedging ratios depend on regional bank PBRs. The model suggests it's at the cheap end of its...

Travis Lundy

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52-week Range

Market Cap (USDm)

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Nidec (6594)| Q2 In-Line; Long-Term Outlook Intact

​Nidec's Q2 results exceeded my expectations, with strong performance in small motors and appliances but weaker profits in automotive. Stock...

Mark Chadwick

Japan Morning Connection: Risk-On for the AI Ecosystem

​AI sentiment rising with NVDA de-risked, Kioxia IPO positive for memory ecosystem names, Deere's positive outlook lifts AG machinery names like...

Andrew Jackson

Nidec (6594 JP): Buy into Current Decline

Selling at the bottom of its 10-year valuation range. Management has raised guidance after lackluster 1Q results. If further restructuring can be...

Scott Foster

Nidec (6594)| Q1 Beat, but Some One-Offs

​Nidec's Q1 operating profit beat expectations, driven by small precision motors and new earnings from AI server cooling systems. FY forecasts...

Mark Chadwick

Bank of Kyoto (8369) - A Complicated Risk Model Clarified

The Bank of Kyoto (8369) model is clarified so dynamic hedging ratios depend on regional bank PBRs. The model suggests it's at the cheap end of its...

Travis Lundy

Nidec's Q2 results exceeded my expectations, with strong performance in small motors and appliances but weaker profits in automotive. Stock...

AI sentiment rising with NVDA de-risked, Kioxia IPO positive for memory ecosystem names, Deere's positive outlook lifts AG machinery names like...

Nidec's Q1 operating profit beat expectations, driven by small precision motors and new earnings from AI server cooling systems. FY forecasts...