Nidec Earnings: Guidance For The New Fiscal Year Is Conservative; Fair Value 4% Up to JPY 8,000

Although Nidec’s operating income guidance for the new fiscal year 2024 (ending March 2025) of JPY 230 billion was lower than expected, we believe that the new CEO Mitsuya Kishida, appointed in April, has taken a conservative approach, as the company failed to meet its full-year guidance for the past three consecutive years (due to the struggling electric vehicle, or EV, traction motor business). In fact, despite the full-year contribution of the acquired businesses and the consolidation of NPe, a joint venture with the Stellantis Group, the company guides only 2% revenue growth for fiscal 2024, indicating the new management’s strong commitment to achieving this year’s guidance numbers by setting the minimum target. New management said that the company will present a new midterm plan on the June quarter's earnings call to replace the current plan, which has become difficult to achieve. We are encouraged by the actions taken in recent quarters to retreat from the EV traction motor business in the highly competitive Chinese market. We expect the new midterm plan to disclose more realistic targets and various growth opportunities other than the EV traction motor business, which would be a catalyst for Nidec’s shares.