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

Sumitomo Electric Buys Out Sub Nissin Electric (6641) At ¥1,700/Share - ATH But Still Too Low

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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

After rising by 21% from ¥1,200 in late April to a 52-week high of ¥1,450, Nissin Electric  dropped back 1.7% today to ¥1,425. Over the past year, the shares have risen by 45%.The strong recent performance is somewhat at odds with FY Mar-21 results and management's FY Mar-22 guidance. Last year's profits were above guidance, but new orders declined and this year's guidance has operating profit dropping by 7.7%. On the other hand, management expects orders to rebound this year, which points to higher profits in FY Mar-23. Volatility in orders, sales and profits creates uncertainty, but in our estimation, the underlying trend in demand for the company's electric power and ion implant equipment is up.At 15x management's EPS estimate for FY Mar-22, we see long-term upside potential on the order of 20%. Traders may want to take profits.

After rising by 21% from ¥1,200 in late April to a 52-week high of ¥1,450, Nissin Electric  dropped back 1.7% today to ¥1,425. Over the past year, the shares have risen by 45%.The strong recent performance is somewhat at odds with FY Mar-21 results and management's FY Mar-22 guidance. Last year's profits were above guidance, but new orders declined and this year's guidance has operating profit dropping by 7.7%. On the other hand, management expects orders to rebound this year, which points to higher profits in FY Mar-23. Volatility in orders, sales and profits creates uncertainty, but in our estimation, the underlying trend in demand for the company's electric power and ion implant equipment is up.At 15x management's EPS estimate for FY Mar-22, we see long-term upside potential on the order of 20%. Traders may want to take profits.

Nissin Electric (6641 JP): Further Upside Despite Volatility