NGK Spark (5334) – Sparking to Life
Key Points
- Strong H1 results are likely on continued strength of mainstay plugs and sensors, particularly in Europe and China.
- Europe is key: here, strong sales have been enhanced by a strong EUR.
- N. America OEM sales are weak but the profitable spark plug after-market is firm.
- China, Japan and Asia auto sales are all solid but China will likely see a pullback in Jan-Mar 2018 as the sales tax in China rises to 10%. Profitable diesel-related sales in Europe has been affected by VW (VOW GR).
- NGK will host a Sept 29th meeting for its mainstay spark plug / sensor business, which is fully booked. We expect positive guidance on sales volumes.
- NGK’s currency exposure is likely to provide a boost to earnings. Valuations are undemanding.
NGK Spark Plug is engaged in the manufacture and sale of spark plugs to major manufacturers worldwide in the automotive, electronics and other industries. Co.'s principal business segments are automobile-related, technical ceramic-related and others. Co.'s principal products include plugs, glow plugs, various automotive sensors, ceramic engine parts, automotive components, organic build-up package, ceramic package, other semiconductor components, electronic components, cutting tools, and ceramics products for industrial and medical applications. Co. is also engaged in the sale of production tools and the provision of transportation services and welfare services.
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012.
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