Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Securities analyst covering electronics, precision equipment & robotics, engineering, construction, transport and other sectors for more than 25 years in Japan and 3 years in Korea. Permanent resident of Japan.

Senior Technology Analyst, Japanese Equities

Nidec – Early Results for the EV Business Look Terrible

Nidec (6594 JP): HDD & EV Motors Drag Down Profit Margins

Nidec – Machinery and Appliance, Commercial and Industry Segments Rolling Over

Nidec (6594 JP): Guidance Probably Conservative, but Still Overvalued

Gravity Works As WeWork Doesn't; Now Plan B

Nidec (6594 JP): Takeaways from 3Q Results and New Guidance

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

Nidec's share price jumped 2.4% to ¥1,300 on Wednesday, July 21 - the last trading day before Japan's national holidays, when the company announced results for 1Q of FY Mar-22 - but fell back 3.2% to ¥12,580 today.This reflects the positives and negatives facing the company as it ramps up production of EV motors and drive systems.Results for the three months to June looked good, with operating profit up 60% year-on-year on a 33% increase in sales. 1Q sales, operating profit and net profit were all about 56% of 1H guidance.On top of that, Nidec and Hon Hai announced plans to establish a joint venture to develop Nidec E-axle traction motor systems for EVs made by Hon Hai subsidiary Foxtron Vehicle Technologies.However, competitor Hitachi (6501 JP) announced plans to build EV component factories in Japan China and the U.S. to expand capacity by about 6 times; and price competition in China is severe.At 53x management's EPS guidance and 50x our own EPS estimate for FY Mar-22, and 40x our estimate for FY Mar-24, a lot of potential growth is already in the price.We reiterate our previous conclusion: Guidance is probably conservative, but the shares are still overvalued.

Nidec's share price jumped 2.4% to ¥1,300 on Wednesday, July 21 - the last trading day before Japan's national holidays, when the company announced results for 1Q of FY Mar-22 - but fell back 3.2% to ¥12,580 today.This reflects the positives and negatives facing the company as it ramps up production of EV motors and drive systems.Results for the three months to June looked good, with operating profit up 60% year-on-year on a 33% increase in sales. 1Q sales, operating profit and net profit were all about 56% of 1H guidance.On top of that, Nidec and Hon Hai announced plans to establish a joint venture to develop Nidec E-axle traction motor systems for EVs made by Hon Hai subsidiary Foxtron Vehicle Technologies.However, competitor Hitachi (6501 JP) announced plans to build EV component factories in Japan China and the U.S. to expand capacity by about 6 times; and price competition in China is severe.At 53x management's EPS guidance and 50x our own EPS estimate for FY Mar-22, and 40x our estimate for FY Mar-24, a lot of potential growth is already in the price.We reiterate our previous conclusion: Guidance is probably conservative, but the shares are still overvalued.

Nidec (6594 JP): Good 1Q, but EV Motors Face Tough Competition and Severe Pricing

Nidec Corp

Nidec (6594 JP): Good 1Q, but EV Motors Face Tough Competition and Severe Pricing