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>Nidec is headed into the red due to market disruption in China, restructuring charges and stagflation.</li>
<li>The first two of these factors should be temporary, but the third points to longer term pressure on margins. Competition in EV motors is another problem that won't go away.</li>
<li>In a weak economy characterized by stagflation, it is too early to turn bullish.</li>
</ul>


Nidec is headed into the red due to market disruption in China, restructuring charges and stagflation.
The first two of these factors should be temporary, but the third points to longer term pressure on margins. Competition in EV motors is another problem that won't go away.
In a weak economy characterized by stagflation, it is too early to turn bullish.


Nidec (6594): A V-Shaped Recovery Cannot Be Taken for Granted

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS.  Stocks Mixed as SPX -0.1% as NYSE Glitches on Open;  MSFT Beats  but Chip Giant Texas Instruments weak; DoJ calls for Google Ad Break up</li>
<li>JAPAN.  NKY Futs -0.4% vs Cash; USDJPY steady at 130.19; Japan Freezes - No Joke; Nikkei Survey shows public sentiment toward Nuclear Power improving; Nidec misses; Elliot tgts DNP </li>
<li>DAILY NUGGET. Is Japan Stuck ? This is the view of outgoing BBC reporter. We disagree - changes are happening. </li>
</ul>


OVERSEAS.  Stocks Mixed as SPX -0.1% as NYSE Glitches on Open;  MSFT Beats  but Chip Giant Texas Instruments weak; DoJ calls for Google Ad Break up
JAPAN.  NKY Futs -0.4% vs Cash; USDJPY steady at 130.19; Japan Freezes - No Joke; Nikkei Survey shows public sentiment toward Nuclear Power improving; Nidec misses; Elliot tgts DNP 
DAILY NUGGET. Is Japan Stuck ? This is the view of outgoing BBC reporter. We disagree - changes are happening. 


Good Morning Japan |NYSE Glitches; Stocks Mixed; While JP Freezes the Public Warms to Nuclear Power

<ul>
<li>Nidec slashed its full year operating profit guidance by 48% to 110 billion yen</li>
<li>For Q3, Nidec reported an operating profit of 28 billion yen (-37% YoY), significantly below street expectations (51 billion)</li>
<li>We remain bullish, expecting cost cutting efforts to ignite a profit recovery next year</li>
</ul>


Nidec slashed its full year operating profit guidance by 48% to 110 billion yen
For Q3, Nidec reported an operating profit of 28 billion yen (-37% YoY), significantly below street expectations (51 billion)
We remain bullish, expecting cost cutting efforts to ignite a profit recovery next year


<ul>
<li>Nidec has become an auto parts and factory automation company and should be valued as such. At 24x EPS guidance for FY Mar-23, the shares do not look particularly cheap.</li>
<li>1H results were good, but heavy up-front investment in e-axle traction motor systems for electric vehicles points to deferred gratification for shareholders. </li>
<li>Recession is starting to bite, the Yen is up and Japanese interest rates have only started to rise. Be careful when buying for long-term growth.</li>
</ul>


Nidec has become an auto parts and factory automation company and should be valued as such. At 24x EPS guidance for FY Mar-23, the shares do not look particularly cheap.
1H results were good, but heavy up-front investment in e-axle traction motor systems for electric vehicles points to deferred gratification for shareholders. 
Recession is starting to bite, the Yen is up and Japanese interest rates have only started to rise. Be careful when buying for long-term growth.


Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>There are 48 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.</li>
<li>Four new deals were discussed on Smartkarma: the <a href="https://www.smartkarma.com/entities/st-barbara-ltd" target="_blank" data-smartkarma-citation="entities:3764:1" rel="noopener">St Barbara (SBM AU)</a>/ <a href="https://www.smartkarma.com/entities/genesis-minerals-ltd" target="_blank" data-smartkarma-citation="entities:4650:1" rel="noopener">Genesis Minerals (GMD AU)</a> merger; <a href="https://www.smartkarma.com/entities/acotec-scientific-holdings-limited" target="_blank" data-smartkarma-citation="entities:32176:1" rel="noopener">Acotec (6669 HK)</a>'s Offer, <a href="https://www.smartkarma.com/entities/okk-corp" target="_blank" data-smartkarma-citation="entities:15496:1" rel="noopener">Okk (6205 JP)</a>'s Offer, <a href="https://www.smartkarma.com/entities/mineral-resources-ltd" target="_blank" data-smartkarma-citation="entities:15103:1" rel="noopener">MinRes (MIN AU)</a>/<a href="https://www.smartkarma.com/entities/norwest-energy-nl" target="_blank" data-smartkarma-citation="entities:1433:1" rel="noopener">Norwest (NWE AU)</a> merger.</li>
<li>Key updates took place for: <a href="https://www.smartkarma.com/entities/tyro-payments-ltd" target="_blank" data-smartkarma-citation="entities:28393:1" rel="noopener">Tyro Payments (TYR AU)</a>, <a href="https://www.smartkarma.com/entities/origin-energy-ltd" target="_blank" data-smartkarma-citation="entities:797:1" rel="noopener">Origin Energy (ORG AU)</a>, <a href="https://www.smartkarma.com/entities/yashili-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3397:1" rel="noopener">Yashili International Holdings (1230 HK)</a>, and <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a>.</li>
</ul>


There are 48 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Four new deals were discussed on Smartkarma: the St Barbara (SBM AU)/ Genesis Minerals (GMD AU) merger; Acotec (6669 HK)'s Offer, Okk (6205 JP)'s Offer, MinRes (MIN AU)/Norwest (NWE AU) merger.
Key updates took place for: Tyro Payments (TYR AU), Origin Energy (ORG AU), Yashili International Holdings (1230 HK), and Toyo Construction (1890 JP).


(Mostly) Asia-Pac Weekly Risk Arb Wrap: St Barbara/Genesis, Tyro, Yashili, Acotec, Okk Corp/Nidec

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): A V-Shaped Recovery Cannot Be Taken for Granted

It is too early to turn bullish on Nidec. The company will probably return to profit after restructuring, but stagflation and competition in EV...

Scott Foster

Good Morning Japan |NYSE Glitches; Stocks Mixed; While JP Freezes the Public Warms to Nuclear Power

JAPAN. NKY Futs -0.4% vs Cash; USDJPY steady at 130.19; Japan Freezes - No Joke; Nikkei Survey shows public sentiment toward Nuclear Power...

Mark Chadwick

Nidec (6594) | Down but Not Out

Nidec remains a key beneficiary of multiple megatrends: digital transformation, robotics, energy efficiency and decarbonization. We remain bullish...

Mark Chadwick

Nidec (6594 JP): New Valuation Benchmark

It is fashionable to criticize Nidec's business model, but valuation compression is the greater risk. Japanese interest rates have started to rise...

Scott Foster

(Mostly) Asia-Pac Weekly Risk Arb Wrap: St Barbara/Genesis, Tyro, Yashili, Acotec, Okk Corp/Nidec

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

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