Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

Equity Bottom-Up

<ul>
<li>Nidec’s Improvement Plan touches on all 6 of the reforms we said were needed in our Nov 26 report and more. This is much better than we expected.</li>
<li>We wrote that Nidec was a governance nightmare with poor oversight, a history of bad strategic decisions, and shoddy execution. We had no idea how bad, but now we do.</li>
<li>We also argued that if these problems could be fixed, the upside would be enormous. Our expectations of this were low at the time, but this report raises expectations significantly.</li>
</ul>


Nidec’s Improvement Plan touches on all 6 of the reforms we said were needed in our Nov 26 report and more. This is much better than we expected.
We wrote that Nidec was a governance nightmare with poor oversight, a history of bad strategic decisions, and shoddy execution. We had no idea how bad, but now we do.
We also argued that if these problems could be fixed, the upside would be enormous. Our expectations of this were low at the time, but this report raises expectations significantly.


Nidec (6594): Almost Everything We Asked For, But More

<ul>
<li>Shigenobu Nagamori resigned as director but remains honorary chairman, a move we see as insufficient to address Nidec's recent accounting controversy.</li>
<li>Meaningful recovery requires both founders’ full retirement, a restructured, more independent board, and a chief risk officer to oversee professional auditing and reforms.</li>
<li>The company also needs to improve transparency on assets, overhaul incentives toward return on investment, and develop a realistic mid-term plan to improve return on capital.</li>
</ul>


Shigenobu Nagamori resigned as director but remains honorary chairman, a move we see as insufficient to address Nidec's recent accounting controversy.
Meaningful recovery requires both founders’ full retirement, a restructured, more independent board, and a chief risk officer to oversee professional auditing and reforms.
The company also needs to improve transparency on assets, overhaul incentives toward return on investment, and develop a realistic mid-term plan to improve return on capital.


Nidec (6594): Fake Resignations Don't Count

<ul>
<li>Until the latest accounting scandal, Nidec was just another stupidly over-valued company that chased too many rainbows and missed too many targets.</li>
<li>Now, finally, it has fallen to interesting valuations and there is a real incentive to fix the things that need fixing. </li>
<li>Nidec is a governance nightmare with poor oversight, a history of bad strategic decisions, and shoddy execution. If these are fixed, though, the upside is enormous.</li>
</ul>


Until the latest accounting scandal, Nidec was just another stupidly over-valued company that chased too many rainbows and missed too many targets.
Now, finally, it has fallen to interesting valuations and there is a real incentive to fix the things that need fixing. 
Nidec is a governance nightmare with poor oversight, a history of bad strategic decisions, and shoddy execution. If these are fixed, though, the upside is enormous.


Can Nidec (6594) Ever Wake Up from Its Compliance Nightmare?

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nidec-corp" target="_blank" data-smartkarma-citation="entities:7245:1" rel="noopener">Nidec (6594 JP)</a>'s deletion is a LOT of stock to sell. The <a href="https://www.smartkarma.com/entities/ibiden-co-ltd" target="_blank" data-smartkarma-citation="entities:16630:1" rel="noopener">Ibiden (4062 JP)</a>'s Nikkei 225 inclusion is huge. It'll make the stock enormously squeezy for a long while.</li>
<li>Palliser has a point. <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem (051910 KS)</a> should pare down its <a href="https://www.smartkarma.com/entities/lg-energy-solution" target="_blank" data-smartkarma-citation="entities:33464:1" rel="noopener">LG Energy Solution (373220 KS)</a> stake, and buy back shares. Yet, would/will management stubbornly swat away any such proposal?</li>
<li>The latest twist in the <a href="https://www.smartkarma.com/entities/mayne-pharma-group-ltd" target="_blank" data-smartkarma-citation="entities:757:1" rel="noopener">Mayne Pharma (MYX AU)</a> saga as FIRB looks set to ding the transaction if there is a possibility Cosette closes a manufacturing site in Adelaide.</li>
</ul>



Nidec (6594 JP)'s deletion is a LOT of stock to sell. The Ibiden (4062 JP)'s Nikkei 225 inclusion is huge. It'll make the stock enormously squeezy for a long while.
Palliser has a point. LG Chem (051910 KS) should pare down its LG Energy Solution (373220 KS) stake, and buy back shares. Yet, would/will management stubbornly swat away any such proposal?
The latest twist in the Mayne Pharma (MYX AU) saga as FIRB looks set to ding the transaction if there is a possibility Cosette closes a manufacturing site in Adelaide.


Last Week In Event SPACE: Nidec/Ibiden, LG Chem, Mayne Pharma, Jardine Matheson

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Index Rebalance

<ul>
<li>JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.</li>
<li>The annual index review takes place in August every year. We look at the latest rankings of potential ADDs/DELs every month.</li>
<li>Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2026 based on trading data as of end-October 2025.</li>
</ul>


JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
The annual index review takes place in August every year. We look at the latest rankings of potential ADDs/DELs every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2026 based on trading data as of end-October 2025.


Quiddity JPX-Nikkei 400 Rebal 2026: End-Oct 2025 Ranks

Japan

NIDEC CORPORATION is the world's leading manufacturer of small precision motors mainly used in HDD and optical disk drives. The company has extended its focus to the home appliance and automotive markets. NIDEC is active in M&A and its subsidiaries include the world's leading manufacturers of LCD panel handling robots and camera shutters.

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Nidec Corp (6594 JP)

Nidec (6594): Almost Everything We Asked For, But More

Nidec's Improvement Plan exceeds our expectations by addressing governance issues and strategic execution, raising hopes for significant upside...

Michael Allen

Nidec (6594): Fake Resignations Don't Count

Shigenobu Nagamori's resignation as director of Nidec resolves nothing. Both founders should retire, and a complete board restructuring is needed...

Michael Allen

Can Nidec (6594) Ever Wake Up from Its Compliance Nightmare?

Nidec, once over-valued and plagued by governance issues, now presents a potential opportunity for improvement and potential upside.

Michael Allen

Last Week In Event SPACE: Nidec/Ibiden, LG Chem, Mayne Pharma, Jardine Matheson

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Quiddity JPX-Nikkei 400 Rebal 2026: End-Oct 2025 Ranks

We expect the HIGH-conviction Potential ADDs to outperform the HIGH-conviction Potential DELs. Nidec is no longer part of our potential ADDs.

Janaghan Jeyakumar, CFA

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52-week Range

Market Cap (USDm)

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Nidec (6594): Almost Everything We Asked For, But More

​Nidec's Improvement Plan exceeds our expectations by addressing governance issues and strategic execution, raising hopes for significant upside...

Michael Allen

Nidec (6594): Fake Resignations Don't Count

​Shigenobu Nagamori's resignation as director of Nidec resolves nothing. Both founders should retire, and a complete board restructuring is needed...

Michael Allen

Can Nidec (6594) Ever Wake Up from Its Compliance Nightmare?

​Nidec, once over-valued and plagued by governance issues, now presents a potential opportunity for improvement and potential upside.

Michael Allen

Last Week In Event SPACE: Nidec/Ibiden, LG Chem, Mayne Pharma, Jardine Matheson

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Quiddity JPX-Nikkei 400 Rebal 2026: End-Oct 2025 Ranks

We expect the HIGH-conviction Potential ADDs to outperform the HIGH-conviction Potential DELs. Nidec is no longer part of our potential ADDs.

Janaghan Jeyakumar, CFA

Nidec's Improvement Plan exceeds our expectations by addressing governance issues and strategic execution, raising hopes for significant upside...

Shigenobu Nagamori's resignation as director of Nidec resolves nothing. Both founders should retire, and a complete board restructuring is needed...

Nidec, once over-valued and plagued by governance issues, now presents a potential opportunity for improvement and potential upside.