Assuming Steeper Slowdown in 2019-20 for Nabtesco, Our FVE Cut to JPY 3,800; Still Attractive
We cut Nabtesco's fair value estimate to JPY 3,800 from JPY 4,130 after factoring in the risk of lower margins due to a decline in operating leverage as growth in sales of precision gears to the auto segment eases. Nabtesco’s plant utilization, while still over 100%, is down from 2017’s lofty levels, and with uncertainty over global demand in 2019, and the company’s own capacity expansion coming on stream in 2020, we see a risk of plant utilization declining to around 95%-100%. This leads us to ...Nabtesco is engaged in the design, manufacture, sales, and repair of industrial machinery and components. Co. operates in three business segments: component solutions, transport solutions and accessibility solutions. Co.'s principal products are high precision reducers and actuators for industrial robots, construction machinery, solar tracking equipment, automatic door drive units, automobile air-break systems, automatic testing/training equipment, connecting device, various types of actuators, remote control systems for marine vessels, automatic door systems, smoke exhausting systems and platform safety system as well as nursing care equipment and industrial equipment.
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