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Nidec: solid Q1 results see investors buying back into Japanese engineer

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Shares in Japanese electronic motors specialist Nidec (TYO:6594) have been on a run since positive Q1 results, with currently no sign of running out of momentum. The specialist in disk drive spindle motors saw its stock move off a recent low of JPY 7882 in the third week of June, and it is now trading at JPY 9160, although it has breached JPY 9600 in recent days. That puts the stock at back to where it was in April, with increasing evidence that the ship is turning around.

Broker Killik & Co reiterated its Buy rating for the company. “Nidec posted strong growth in first quarter sales, while its operating margin improved sequentially despite the tough operating environment including continued headwinds from rising raw material prices, supply chain disruptions and lockdowns in China,” explained Killik analyst Martin Maloney. “Sales of electric vehicles equipped with Nidec’s traction motor system more than doubled from a year earlier and the company increased its medium-term guidance for sales of EV motors.”

Nidec’s shares trade on 33.8x March 2023 consensus earnings, which Maloney believes is an attractive valuation for the world’s leading manufacturer of small motors.

“We reiterate our Buy rating on Nidec shares as a world class operator that is set to be a beneficiary of several long-term secular growth opportunities in electric vehicles, energy-saving home appliances, and robotics,” he said.

Net sales increased at Nidec 21.8% year on year, ahead of consensus estimates for 16.3% growth. Operating profit was roughly flat versus the previous year, above consensus estimates for a 2.7% decline. The company’s operating margin decreased by 170bps to 8.3%. EPS was JPY 71.50, above consensus estimates of JPY 58.46.


Sales in Nidec’s Appliance, Commercial and Industrial Products (ACI) business increased 19.4% year over year due to strong sales in the power generator business. An operating margin of 8.0% declined 250bps, mainly due to changes in the product mix.

In Automotive Products, sales increased 15.9% year on year despite difficulties in procuring semiconductors and other electronic components among customers. An operating margin of 0% compares to 5.0% in the same period last year due to higher raw material prices and lockdowns in China.

Nidec also announced that the cumulative number of vehicles using its E-Axle, the traction motor system that it has developed, has reached 418,000 units, with eleven models using the company’s technology and unit sales increasing 169% in the quarter.

In Small Precision Motors, sales were up 9.7% as increased sales of IT fan motors, high-efficiency motors for home appliances, and thermal solution products were offset by a decline in sales of spindle motors for HDDs. An operating margin of 11.7% compares to 12.1% in the same period last year.

Sales in the Machinery segment were up 63.7% due to the company’s entry into the machine tool business in addition to higher sales of semiconductor inspection systems and can making presses. The operating margin of 18.3% declined 100bps.

Further technical analysis supports Killik’s prognosis of a strong buy for Nidec, especially looking at the moving average indicators.

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