Friday, February 8, 2019

A Sharp Downturn In China Seizing Up Nidec's Growth Engine

Evidence continues to mount that conditions in China, and to a lesser extent other regions around the world, are not good. Nidec (OTCPK:NJDCY) (6594.T) has seen a withering decline in auto business in the last couple of quarters, with weakness spreading beyond autos into consumer appliances and various industrial markets. At the same time, though, Nidec continues to build for its future – globalizing its production capabilities and logging significant inquiries for its electric vehicle traction motors.

Nidec isn’t quite as cheap as I might wish, and I think this macro malaise could linger on a little while longer than the Street presently expects, but I think this is a very good company now trading at a reasonable valuation. In addition to a major opportunity in EV motors, I believe Nidec is leveraged to ongoing growth in brushless motors, robotics, and data centers, and could deliver meaningful operating leverage with this latest efficiency initiative. Looking past the rocky near-term, I think these shares could be 10% undervalued today and that the shares could re-rate meaningfully higher as 2019 moves on if and when the outlook for China improves.

Read more here:
A Sharp Downturn In China Seizing Up Nidec's Growth Engine

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