Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. NDX100 +1.8%  SOX +3.3% vs. SPX +0.9% DOW +0.6%; Tech back ahead of Fed; Energy a different story as Oil fell on D-S worries; All eyes remain on CPI/Fed</li>
<li>JAPAN. NKY Futs +0.7% premium vs Cash; Japan lead yesterday vs US..rarity; Expect continued Equity follow through; Seino HD(9076) -Massive Buyback, Div hike; TOYOTA-Path to Solid State Battery Commercialization?</li>
<li>NUGGET. Nidec Succession Resolution in Sight, but Nagamori Premium May Dissappear</li>
</ul>


OVERSEAS. NDX100 +1.8%  SOX +3.3% vs. SPX +0.9% DOW +0.6%; Tech back ahead of Fed; Energy a different story as Oil fell on D-S worries; All eyes remain on CPI/Fed
JAPAN. NKY Futs +0.7% premium vs Cash; Japan lead yesterday vs US..rarity; Expect continued Equity follow through; Seino HD(9076) -Massive Buyback, Div hike; TOYOTA-Path to Solid State Battery Commercialization?
NUGGET. Nidec Succession Resolution in Sight, but Nagamori Premium May Dissappear


Ohayo Japan |BIG TECH BACK ! NUGGET: Nidec Succession Headaches-Resolution in Sight But...

<ul>
<li>OVERSEAS. US Rally Pauses as weak(er) Services ISM brings recession risk reminder; MS Big Bearish Call on SPX; Apple unveils Game Changing VR Headset ; Crypto Worries -Binance CEO Charged</li>
<li>JAPAN. NKY Futs -0.3% vs Cash; Expect a pull back today given US pause, overbought markets, and stronger yen;  MS Bullish Call on Japan; Panasonic expands Battery production for TESLA</li>
<li>NUGGET. Data Centers - Demand set to Explode with AI: Next Growth Driver for an Already undervalued Kansai Electric ?</li>
</ul>


OVERSEAS. US Rally Pauses as weak(er) Services ISM brings recession risk reminder; MS Big Bearish Call on SPX; Apple unveils Game Changing VR Headset ; Crypto Worries -Binance CEO Charged
JAPAN. NKY Futs -0.3% vs Cash; Expect a pull back today given US pause, overbought markets, and stronger yen;  MS Bullish Call on Japan; Panasonic expands Battery production for TESLA
NUGGET. Data Centers - Demand set to Explode with AI: Next Growth Driver for an Already undervalued Kansai Electric ?


Ohayo Japan|US Rally Pauses on Services ISM-Recession Fears?; NUGGET: KEPCO, AI, and Data Centers ?

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.

Equity Bottom-Up

<ul>
<li>FY Mar-23 results fell short of expectations and management is guiding for a weak 1H in the new fiscal year. This looks like a buying opportunity.</li>
<li>The E-Axle business should reach break-even this year. Rising EV demand in China, Europe and elsewhere, plus general electrification, should take the overall Automotive operating margin to 10%.</li>
<li>Projected valuations are attractive even if sales do not reach management's ambitious target.</li>
</ul>


FY Mar-23 results fell short of expectations and management is guiding for a weak 1H in the new fiscal year. This looks like a buying opportunity.
The E-Axle business should reach break-even this year. Rising EV demand in China, Europe and elsewhere, plus general electrification, should take the overall Automotive operating margin to 10%.
Projected valuations are attractive even if sales do not reach management's ambitious target.


Nidec (6594 JP): Buy into Current Weakness

<ul>
<li>NIdec's full year FY3/23 operating profit declined 41% to Y100b, far short of analyst estimates</li>
<li>However, FY3/24 corporate guidance for Y220b in operating profit is very bullish and assumes a V-shaped recovery in margins</li>
<li>Given the macro outlook and lack of clarity on the restructuring charges, we prefer to remain cautious. </li>
</ul>


NIdec's full year FY3/23 operating profit declined 41% to Y100b, far short of analyst estimates
However, FY3/24 corporate guidance for Y220b in operating profit is very bullish and assumes a V-shaped recovery in margins
Given the macro outlook and lack of clarity on the restructuring charges, we prefer to remain cautious. 


Nidec (6594) | Remain Cautious Despite Bullish Guidance

<ul>
<li>We do not expect any major surprises when Nidec reports FY3/23 earnings on 24 April</li>
<li>However, we believe that there is a significant risk that the company will guide below analyst consensus for FY3/24</li>
<li>We are bearish going into results. After that, there could be an opportunity to turn bullish again on FY3/25 PE of 14x</li>
</ul>


We do not expect any major surprises when Nidec reports FY3/23 earnings on 24 April
However, we believe that there is a significant risk that the company will guide below analyst consensus for FY3/24
We are bearish going into results. After that, there could be an opportunity to turn bullish again on FY3/25 PE of 14x


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)

Ohayo Japan |BIG TECH BACK ! NUGGET: Nidec Succession Headaches-Resolution in Sight But...

Tech Back as US Equities Well Bid; NKY Futs +0.7% premium vs Cash; ; Seino HD(9076) - Massive Buyback, Div hike; TOYOTA - Sees path to Solid State...

Mark Chadwick

Ohayo Japan|US Rally Pauses on Services ISM-Recession Fears?; NUGGET: KEPCO, AI, and Data Centers ?

NKY Futs -0.3% vs Cash; Expect a pull back today given US pause, overbought markets, and stronger yen; MS Bullish Call on Japan; Panasonic expands...

Mark Chadwick

Nidec (6594 JP): Buy into Current Weakness

Restructuring and strong demand for EVs have set the stage for renewed profit growth. Projected valuations attractive even if management's...

Scott Foster

Nidec (6594) | Remain Cautious Despite Bullish Guidance

Nidec announced a 41% decrease in operating profit to Y100b due to structural reform expenses of Y75b. We are sceptical that the company can...

Mark Chadwick

Nidec (6594) | FY3/24 Guidance Risk

We believe that there is a significant risk that Nidec will guide below analyst consensus for FY3/24. We see a V-shaped recovery only in FY3/25

Mark Chadwick

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