Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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>Nidec faces the issue of a decline in volumes for HDD motors and appears to be betting the farm on capturing the top share for EV traction motors. We aren’t at all convinced that they can, but even if they do, the early signs are that that might not be as lucrative as they imagined.</p>

Nidec faces the issue of a decline in volumes for HDD motors and appears to be betting the farm on capturing the top share for EV traction motors. We aren’t at all convinced that they can, but even if they do, the early signs are that that might not be as lucrative as they imagined.

Nidec – Early Results for the EV Business Look Terrible

Independent Insight Provider, Japanese equities, LightStream Research

Scott Foster

Independent Insight Provider, Japanese equities

<ul>
<li>EV motors are out of the red, profits on appliance, commercial and industrial products are up, and the yen is much weaker than management's forecast assumes.</li>
<li>Despite economic uncertainty, achieving FY Mar-24 profit guidance should not be difficult. </li>
<li>Operating margin trends are generally positive and valuations not too high for longer-term investors. Buy into current pull-back.</li>
</ul>


EV motors are out of the red, profits on appliance, commercial and industrial products are up, and the yen is much weaker than management's forecast assumes.
Despite economic uncertainty, achieving FY Mar-24 profit guidance should not be difficult. 
Operating margin trends are generally positive and valuations not too high for longer-term investors. Buy into current pull-back.


Japan Specialist

Mark Chadwick

<ul>
<li>Nidec reported strong Q1 results - operating profit of ¥60.2 billion (+35% YoY), significantly above Street expectations of ¥45 billion</li>
<li>The big positive was a rebound in profitability following successful structural cost cuts last year. The key negative is a cut to unit shipments for key growth driver, E-axles. </li>
<li>We remain bearish for now given valuation of 25x EV/EBIT.  We are not sure that the new growth driver in Motion &amp; Energy will offset lowered expectations for EVs. </li>
</ul>


Nidec reported strong Q1 results - operating profit of ¥60.2 billion (+35% YoY), significantly above Street expectations of ¥45 billion
The big positive was a rebound in profitability following successful structural cost cuts last year. The key negative is a cut to unit shipments for key growth driver, E-axles. 
We remain bearish for now given valuation of 25x EV/EBIT.  We are not sure that the new growth driver in Motion &amp; Energy will offset lowered expectations for EVs. 


Nidec (6594) | Big Revision Down to E-Axle Sales

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

<ul>
<li>We had a call with <a href="https://www.smartkarma.com/entities/delta-electronics-inc" target="_blank" data-smartkarma-citation="entities:12688:1" rel="noopener">Delta Electronics (2308 TT)</a> management to understand the company’s latest developments, particularly in relation to its growing automotive and EV businesses.</li>
<li>Delta Thailand shares have rallied 55.4% in T$ terms, while Delta Taiwan has only rallied 9.3%.</li>
<li>Delta’s EV business is growing 50% per year and has major customers including Tesla, GM, and Volkswagen, however, our sense is the Taiwan entity has an advantage. </li>
</ul>


We had a call with Delta Electronics (2308 TT) management to understand the company’s latest developments, particularly in relation to its growing automotive and EV businesses.
Delta Thailand shares have rallied 55.4% in T$ terms, while Delta Taiwan has only rallied 9.3%.
Delta’s EV business is growing 50% per year and has major customers including Tesla, GM, and Volkswagen, however, our sense is the Taiwan entity has an advantage. 


Delta Electronics: Taiwan Vs. Thailand Pairs Monitor, Call with Management

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The Nikkei Index Team has suggested a methodology change to the Nikkei 225 Average.</li>
<li>It involves capping stocks, creating a method for re-weighting once capped then stocks fall, and they recommend changing to a semi-annual Periodic Review - twice a year rather than once.</li>
<li>More interestingly, they also change the "High Liquidity" definition to be related to traded value not volume, which starts to favour higher-market cap stocks with more shares out.</li>
</ul>


The Nikkei Index Team has suggested a methodology change to the Nikkei 225 Average.
It involves capping stocks, creating a method for re-weighting once capped then stocks fall, and they recommend changing to a semi-annual Periodic Review - twice a year rather than once.
More interestingly, they also change the "High Liquidity" definition to be related to traded value not volume, which starts to favour higher-market cap stocks with more shares out.


Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough

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 – Early Results for the EV Business Look Terrible

Nidec faces declining volumes for HDD motors and is betting the farm on capturing the top share for EV traction motors but early signs are that...

Mio Kato

Nidec (6594 JP): Favorable Margin Trends

EV motors now profitable and OP margin on Appliance, Commercial & Industrial above 10%. Forex assumptions very conservative, making upward revision...

Scott Foster

Nidec (6594) | Big Revision Down to E-Axle Sales

We remain bearish for now given valuation of 25x EV/EBIT. We are not sure that the new growth driver in Motion & Energy will offset lowered...

Mark Chadwick

Delta Electronics: Taiwan Vs. Thailand Pairs Monitor, Call with Management

We had a call with Delta Electronics (2308 TT) management to understand the company’s latest developments, particularly in relation to its growing...

Vincent Fernando, CFA

Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough

The Nikkei proposes changes to the Nikkei 225 methodology. There is a cap, a cap re-mark, and a move to twice-annual reviews. And there is also a...

Travis Lundy

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