IR & Research Intelligence, Sessa Investment Research

Sessa Investment Research

IR & Research Intelligence

Sponsored research focusing on Japanese small cap.

Equity Bottom-Up

<ul><li>1Q 2025/3 Earnings Result Summary: NITTO KOGYO Corporation (hereafter, the Company) reported net sales of ¥38,742 mn (+12.6% YoY), operating profit of ¥1,601 mn (-9.6% YoY), ordinary profit of ¥1,996 mn (-2.6% YoY), and profit attributable to owners of parent (hereafter, net profit) of ¥3,704 mn (+167.8% YoY).</li><li>According to the Company, sales, operating profit, and ordinary profit were generally within expectations.</li><li>The Company acquired shares of Tempearl Industrial Co., Ltd. on April 30, 2024, making it a subsidiary, and recorded a gain on negative goodwill of ¥2,665 mn as extraordinary profit.</li></ul>

1Q 2025/3 Earnings Result Summary: NITTO KOGYO Corporation (hereafter, the Company) reported net sales of ¥38,742 mn (+12.6% YoY), operating profit of ¥1,601 mn (-9.6% YoY), ordinary profit of ¥1,996 mn (-2.6% YoY), and profit attributable to owners of parent (hereafter, net profit) of ¥3,704 mn (+167.8% YoY).According to the Company, sales, operating profit, and ordinary profit were generally within expectations.The Company acquired shares of Tempearl Industrial Co., Ltd. on April 30, 2024, making it a subsidiary, and recorded a gain on negative goodwill of ¥2,665 mn as extraordinary profit.

Nitto Kogyo Corporation (6651 Jp): 1Q Follow-Up - September 12, 2024

<ul><li>NITTO KOGYO Corporation (hereafter, the Company) announced its earnings results for FY2024/3 on May 15, 2024.</li><li>In addition to posting record net sales, the Company recorded profit growth for all three of its segments.</li><li>While the price of raw materials and parts rose, the Company’s gross profit margin improved 1.4 ppt YoY to 26.8%. </li></ul>

NITTO KOGYO Corporation (hereafter, the Company) announced its earnings results for FY2024/3 on May 15, 2024.In addition to posting record net sales, the Company recorded profit growth for all three of its segments.While the price of raw materials and parts rose, the Company’s gross profit margin improved 1.4 ppt YoY to 26.8%. 

Nitto Kogyo Corporation (6651 JP) - 4Q Follow-Up

<ul><li><strong>News:</strong> The Nikkei on April 25th reported, "A dark cloud is hovering over the future of the electric car (EV) market.</li><li>The low prices of Chinese EV manufacturers, backed by Chinese government subsidies, are adversely affecting the performance of related companies such as motor giant Nidec Corporation (TSE Prime: 6594).</li><li>The spread of low-cost EVs will substantially change the structure of the industry, and investors are beginning to look out for companies that will benefit from the commoditization of EVs.</li></ul>

News: The Nikkei on April 25th reported, "A dark cloud is hovering over the future of the electric car (EV) market.The low prices of Chinese EV manufacturers, backed by Chinese government subsidies, are adversely affecting the performance of related companies such as motor giant Nidec Corporation (TSE Prime: 6594).The spread of low-cost EVs will substantially change the structure of the industry, and investors are beginning to look out for companies that will benefit from the commoditization of EVs.

Nitto Kogyo Corporation (6651 JP) - News and Imprecation

<ul><li>Nitto Kogyo Corporation (Nitto Kogyo) is a leading manufacturer of distribution boards and panel boards for electrical and telecommunications infrastructure, as well as enclosures that house telecommunications and precision equipment.</li><li>The company has 45 sales offices and nine factories in Japan, including the new Seto Plant, which will begin operating in spring, 2024, and is working to expand its business in ASEAN countries, with overseas production and sales bases in China, Thailand, and Singapore.</li><li>In the renewable energy field, the company is focusing on EMS-related businesses such as solar power generation systems, EV recharging stations, and self-contained industrial solar power storage battery systems.</li></ul>

Nitto Kogyo Corporation (Nitto Kogyo) is a leading manufacturer of distribution boards and panel boards for electrical and telecommunications infrastructure, as well as enclosures that house telecommunications and precision equipment.The company has 45 sales offices and nine factories in Japan, including the new Seto Plant, which will begin operating in spring, 2024, and is working to expand its business in ASEAN countries, with overseas production and sales bases in China, Thailand, and Singapore.In the renewable energy field, the company is focusing on EMS-related businesses such as solar power generation systems, EV recharging stations, and self-contained industrial solar power storage battery systems.

Nitto Kogyo Corporation (6651 Jp) - Long-Term Growth Story Is to Expand Business Domain

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/106/452/original/2019-11-17_11-54-09.png?1573959284" class="editor-image img-responsive" data-smartkarma-image-id="106452"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>4TH DOWN AND A FEW MORE TO GO</strong> - The latest quarterly results are now, with the exception of three large insurance companies are currently in the market and, to loosely paraphrase the under-rated Jesse Winchester's second album title, this is the fourth straight 'down' quarter with the prospect a few more to come. Operating Income has declined by 7.8% and Net Income by 18.8%, taking margins to 6.9% and 4.6%, respectively - declines of 84bps and 122bps. The market has celebrated these new two-year lows by rising to new two-year highs, leaving some to wonder what they are missing, other than yet more central bank liquidity. The trailing-twelve-month (TTM) price-earnings ratio is now 17 times, the highest since 5th February 2018, ten trading days after the long-term market peak.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/106/458/original/2019-11-17_12-49-55.png?1573962614" class="editor-image img-responsive" data-smartkarma-image-id="106458"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/106/459/original/2019-11-17_13-10-47.png?1573963867" class="editor-image img-responsive" data-smartkarma-image-id="106459"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>THE EARNINGS CYCLE HAS YET TO BOTTOM</strong> -  Our Results &amp; Forecast/Revision Score data series cover the last sixteen years of quarterly earnings and eleven years of forecasts and revisions and measure both results and forecasts but also their momentum, providing a better correlation with the market direction than past earnings.   The Forecast/Revision Score leads the Results Score by several months, and the market leads or lags depending on monetary and liquidity conditions. Although both Scores recovered in the last five days of results announcements, the Forecast/Revision Score of 0.45 reached on 8th November is the lowest such score in ten years and is suggesting that earnings have yet to bottom.</p><div class="content-highlight"><p><strong>WISHFUL THINKING? - The 'gap' between market expectations and actual and forecast earnings momentum is now wider than at any time since late 2014, shortly before the market peak of May 2015. Is this foresight or just wishful thinking? We tend to the latter interpretation.</strong></p></div><p><strong>In the DETAIL section below, we shall provide a full breakdown of the results and revisions announcements by Sector, Peer Group and company and offer brief comments on several recommended buys and sells.</strong></p>

Source: Japan Analytics4TH DOWN AND A FEW MORE TO GO - The latest quarterly results are now, with the exception of three large insurance companies are currently in the market and, to loosely paraphrase the under-rated Jesse Winchester's second album title, this is the fourth straight 'down' quarter with the prospect a few more to come. Operating Income has declined by 7.8% and Net Income by 18.8%, taking margins to 6.9% and 4.6%, respectively - declines of 84bps and 122bps. The market has celebrated these new two-year lows by rising to new two-year highs, leaving some to wonder what they are missing, other than yet more central bank liquidity. The trailing-twelve-month (TTM) price-earnings ratio is now 17 times, the highest since 5th February 2018, ten trading days after the long-term market peak.Source: Japan AnalyticsTHE EARNINGS CYCLE HAS YET TO BOTTOM -  Our Results &amp; Forecast/Revision Score data series cover the last sixteen years of quarterly earnings and eleven years of forecasts and revisions and measure both results and forecasts but also their momentum, providing a better correlation with the market direction than past earnings.   The Forecast/Revision Score leads the Results Score by several months, and the market leads or lags depending on monetary and liquidity conditions. Although both Scores recovered in the last five days of results announcements, the Forecast/Revision Score of 0.45 reached on 8th November is the lowest such score in ten years and is suggesting that earnings have yet to bottom.WISHFUL THINKING? - The 'gap' between market expectations and actual and forecast earnings momentum is now wider than at any time since late 2014, shortly before the market peak of May 2015. Is this foresight or just wishful thinking? We tend to the latter interpretation.In the DETAIL section below, we shall provide a full breakdown of the results and revisions announcements by Sector, Peer Group and company and offer brief comments on several recommended buys and sells.

🇯🇵 Japan • Results & Revisions Review - Wishful Thinking

Japan

NITTO KOGYO CORPORATION manufactures and sells a variety of power switchboards. The Company also manufactures metal/resin parts for power switchboards, and circuit breakers.

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Nitto Kogyo (6651 JP)

Nitto Kogyo Corporation (6651 Jp): 1Q Follow-Up - September 12, 2024

Net profit for 1H revised upward due to extraordinary profit recorded in 1Q, projecting record-high full-year sales and net profit

Sessa Investment Research

Nitto Kogyo Corporation (6651 JP) - 4Q Follow-Up

Aiming for net sales of ¥200.0 bn, operating profit of ¥15.0 bn, and ROE of 9% or more in 2026 Medium-term Management Plan through accelerated...

Sessa Investment Research

Nitto Kogyo Corporation (6651 JP) - News and Imprecation

The spread of low-cost EVs will substantially change the structure of the industry, and investors are beginning to look out for companies that will...

Sessa Investment Research

Nitto Kogyo Corporation (6651 Jp) - Long-Term Growth Story Is to Expand Business Domain

Nitto Kogyo Corporation (Nitto Kogyo) is a leading manufacturer of distribution boards and panel boards for electrical and telecommunications...

Sessa Investment Research

🇯🇵 Japan • Results & Revisions Review - Wishful Thinking

4TH DOWN AND A FEW MORE TO GO - The latest quarterly results are now, with the exception of three large insurance companies are currently in the...

Campbell Gunn

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