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

Nidec – Early Results for the EV Business Look Terrible

Nidec (6594 JP): Good Results, Excessive Valuation

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

Gravity Works As WeWork Doesn't; Now Plan B

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​​​​​​​​25 - Koei-Tecmo & Nidec

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

<p>On Thursday, April 22, Nidec announced FY Mar-21 results. On Friday, the shares dropped 5.1%. Why? Possible reasons include:</p><ul>
<li>Nidec founder Shigenobu Nagamori, age 76, will give up the role of  CEO to current president and COO Jun Seki in June. Nagamori will remain Chairman, but his era is drawing to a close and the "Nagamori Premium" may already be evaporating.</li>
<li>FY Mar-21 results were good, but not stellar, and management is guiding for modest growth in FY Mar-22.</li>
<li>Progress is being made with EV motors, robot components and other products, but there is no new growth story. </li>
<li>Management expects EV power trains to become cheaper than internal combustion engine power trains "after 2024." In the meantime, R&amp;D and investment in new capacity are likely to be a drag on margins.</li>
<li>Valuations remain high. Even on what we regard as a reasonably optimistic forecast, with sales exceeding management's ¥2 trillion target in FY Mar-24 and EPS rising by more than 50% by then, the shares are selling at more than 40x earnings.</li>
</ul><p>On January 27, following 3Q results, we wrote "Take profits." We maintain that view.</p>

On Thursday, April 22, Nidec announced FY Mar-21 results. On Friday, the shares dropped 5.1%. Why? Possible reasons include:
Nidec founder Shigenobu Nagamori, age 76, will give up the role of  CEO to current president and COO Jun Seki in June. Nagamori will remain Chairman, but his era is drawing to a close and the "Nagamori Premium" may already be evaporating.
FY Mar-21 results were good, but not stellar, and management is guiding for modest growth in FY Mar-22.
Progress is being made with EV motors, robot components and other products, but there is no new growth story. 
Management expects EV power trains to become cheaper than internal combustion engine power trains "after 2024." In the meantime, R&amp;D and investment in new capacity are likely to be a drag on margins.
Valuations remain high. Even on what we regard as a reasonably optimistic forecast, with sales exceeding management's ¥2 trillion target in FY Mar-24 and EPS rising by more than 50% by then, the shares are selling at more than 40x earnings.
On January 27, following 3Q results, we wrote "Take profits." We maintain that view.

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

Nidec Corp

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