Technology
Analysts are starting to adjust down their estimates of the global no.1 precision motor maker since Asymmetric provided a negative review on 29th Sept. However, there are still 18 BUYs vs. 2 SELLs, consensus OP is in line with CoE (PER >30x) but there is strong potential for a downward revision when it reports 1H. Meanwhile, its core HDD motor business is in long-term decline, its product offering is vulnerable to a global economic slowdown including the Machine Tool business whose prospects CEO Nagamori is very excited about and the EV e-axle business which won't make a significant contribution to profits for a few years.
Edition: 146
- 14 October, 2022
Industrials
Margin mayhem - valuation bubble bursting? Nidec missed 3Q consensus as operating profit came in 12.6% below consensus despite a 5.8% beat at the top line. The deterioration in profitability across the Auto, Machinery, and Appliance, Commercial and Industry businesses is a significant concern. It also suggests that consensus expectations for 22.6% OP growth next year (to ¥236bn) may prove highly optimistic (Mio Kato is forecasting a significant decline; expects ¥170bn). Nidec’s EV/EBIT multiple had risen as high as 45x recently. Mio believes 10x is more appropriate; 15x if you are bullish the EV business which he is not.
Edition: 128
- 04 February, 2022
Industrials
Mio Kato correctly predicted that Robomachine sales would collapse (Q/Q) and sees further downside risk to management’s new guidance. Fanuc’s downgrade also goes against the grain of Yaskawa and Nidec revising up their forecasts. Although there was some good news re. Factory Automation (FA), Mio believes investors should be nervous. He is increasingly confident that the peak is in for the FA sector (Keyence only company which will see growth next year, but too expensive); recommends a rotation into construction machinery.
Edition: 123
- 12 November, 2021