In today’s briefing:
- Nidec (6594 JP): Structural Problems
- Emart: A Turnaround Story With Improvement in Profit Margins
Nidec (6594 JP): Structural Problems
- Founder and Chairman Nagamori has reappointed himself CEO, obscuring the reasons why Nidec’s share price has declined.
- Quarterly earnings should recover, but strategic investments look three years into the future while materials costs rise and the economic situation deteriorates.
- Rising interest rates and compression of valuation multiples are likely to dampen the share price. Look to the long term without expecting a return to the glory days.
Emart: A Turnaround Story With Improvement in Profit Margins
- E Mart Inc (139480 KS) is a very interesting turnaround story in Korea with a visible improvement in profit margins.
- The end of the social distancing measures will likely lead to a gradual increase of the consumers back to the Emart stores.
- Emart is currently trading at attractive valuation multiples of EV/EBITDA of 5.3x and P/B of 0.3x, using 2022 consensus estimates, which are about 19% discount to the historical average.
Related tickers: Nidec Corp (6594.T), E Mart Inc (139480.KS)
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