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

Nissha Printing (TYO: 7915) An Undercovered Japanese OLED IPhone Supplier

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. 

Equity Bottom-Up

Recent developments indicate that Nissha's earnings and stock price are both likely to recover. Apple and Qualcomm's settlement of their patent dispute and announcement of new licensing and supply arrangements opens the way for Apple to launch 5G smartphones,  while new financing for JOLED from INCJ (the Innovation Network Corporation of Japan, an investment fund), Sony and Nissha will pay for an upgrade of JOLED's production facilities. Nissha already has a tie-up with JOLED in touch sensors. Film-based touch sensors (the main product of the company's Devices segment), supplied primarily to Apple, account for more than half of Nissha's sales and almost all of its operating profit.For FY Dec-19, Nissha is guiding for a 5.3% increase in operating profit on a 6.0% decline in sales. Net profit is expected to rise 39.2% after unusually large extraordinary losses and a high effective tax rate last fiscal year. Like last year, management expects weak sales and an operating loss in 1H followed by a rebound in 2H.At ¥1,252 (Friday, April 19, closing price), Nissha is 58% below its 52-week high, 69% below its November 2017 peak of ¥4,070, and only 11% above its 52-week low of ¥1,124, which was reached at the end of March 2019. The shares are now selling at 10.4x management's EPS guidance for FY Dec-19. Japan Analytics calculates 53% potential upside to an annual no-growth valuation.Results for 1Q of FY Dec-19 should be announced on or around May 10. For background on Nissha's technology, see <a href="https://www.smartkarma.com/insights/nissha-printing-tyo-7915-an-undercovered-japanese-oled-iphone-supplier" target="_blank" data-smartkarma-citation="insights:10707">Nissha Printing (TYO: 7915) An Undercovered Japanese OLED IPhone Supplier</a> .

Recent developments indicate that Nissha's earnings and stock price are both likely to recover. Apple and Qualcomm's settlement of their patent dispute and announcement of new licensing and supply arrangements opens the way for Apple to launch 5G smartphones,  while new financing for JOLED from INCJ (the Innovation Network Corporation of Japan, an investment fund), Sony and Nissha will pay for an upgrade of JOLED's production facilities. Nissha already has a tie-up with JOLED in touch sensors. Film-based touch sensors (the main product of the company's Devices segment), supplied primarily to Apple, account for more than half of Nissha's sales and almost all of its operating profit.For FY Dec-19, Nissha is guiding for a 5.3% increase in operating profit on a 6.0% decline in sales. Net profit is expected to rise 39.2% after unusually large extraordinary losses and a high effective tax rate last fiscal year. Like last year, management expects weak sales and an operating loss in 1H followed by a rebound in 2H.At ¥1,252 (Friday, April 19, closing price), Nissha is 58% below its 52-week high, 69% below its November 2017 peak of ¥4,070, and only 11% above its 52-week low of ¥1,124, which was reached at the end of March 2019. The shares are now selling at 10.4x management's EPS guidance for FY Dec-19. Japan Analytics calculates 53% potential upside to an annual no-growth valuation.Results for 1Q of FY Dec-19 should be announced on or around May 10. For background on Nissha's technology, see Nissha Printing (TYO: 7915) An Undercovered Japanese OLED IPhone Supplier .

Nissha (7915 JP) : Apple - Qualcomm Deal Indicates Bottom of the Cycle

Nissha Co

Nissha (7915 JP) : Apple - Qualcomm Deal Indicates Bottom of the Cycle