Director, Pearl Hill Advisors

Nicholas Tanner

Director

Pearl Hill Advisors

Equity Bottom-Up

<p>The shares have been sold off on perceived concerns of a slowdown in FA related spend (not an issue for them) as well as concerns over Nintendo’s hardware sales going forward. The move to OLED screens in the smartphone market has not helped but these fears are overdone in our view. They contribute little to overall earnings. The company will revise up at some stage later this year. Business is better than expected and a weaker yen will help. Next year we expect another 8-10% growth in profits, driven mainly from its core ball bearing division. Although, the company is not really focussing on shareholder returns (payout is a mere 20%), it believes there better returns for the shareholder elsewhere and M&amp;A is clearly on the cards (possibly in the region of Y200bn). For now we will go along with this. It is worth noting that Minebea’s ROIC has steadily crept up to 13.1% from a mere 3.7% 8 years ago. We are BUYERs here, with the shares on 12x 3/20 earnings.</p>

The shares have been sold off on perceived concerns of a slowdown in FA related spend (not an issue for them) as well as concerns over Nintendo’s hardware sales going forward. The move to OLED screens in the smartphone market has not helped but these fears are overdone in our view. They contribute little to overall earnings. The company will revise up at some stage later this year. Business is better than expected and a weaker yen will help. Next year we expect another 8-10% growth in profits, driven mainly from its core ball bearing division. Although, the company is not really focussing on shareholder returns (payout is a mere 20%), it believes there better returns for the shareholder elsewhere and M&amp;A is clearly on the cards (possibly in the region of Y200bn). For now we will go along with this. It is worth noting that Minebea’s ROIC has steadily crept up to 13.1% from a mere 3.7% 8 years ago. We are BUYERs here, with the shares on 12x 3/20 earnings.

Minebea Mitsuimi (6479) Upward to Come, 12x Next Year's Earnings.

Minebea Mitsumi

Minebea Mitsuimi (6479) Upward to Come, 12x Next Year's Earnings.