Nabtesco (6268) FY17 H1 Results – Robot Gearing
Key Points
- H1’s improvement in Robot Gears offsets a disappointing comment from President Teramoto that orders for China high-speed rail devices – which used to generate OPMs exceeding 20% and were the highest margin product for Nabtesco until last year – may never materialize.
- Robot Gears have recently improved to over 20% OPM, it appears..
- The Components Division, which comprised 73% of Nabtesco’s H1 OP, is guided to fall from 18.8% in H1 to 16.5% in H2, largely due to the seasonal sales of Hydraulic Devices, which sell best in Feb-Apr, right after the Chinese New Year. However, we view division sales and OP guidance as conservative, and we expect they will account for a 2-3% overshoot of Nabtesco’s total FY17 OP.
- Management played down OPM improvement for Robot Gears in the Aug 7th analyst meeting, saying expansion in volumes – from 640,000upa at the start of FY17 to 760,000upa (end-FY17) to 840,000upa (end-FY18) and on then to the 1million level (by early FY20, we think) – will eventually lead to a 50% improvement in productivity. However, no OPM contribution is expected or guided for in FY17.
- We have raised our FY17 sales forecast, even with the view that Transportation Division sales will be lower. Medium-to-long term, we continue to like Nabtesco.
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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