6121: Takisawa Machine Tool

Summary

  • Over the past decade, inventory levels have greatly increased, resulting in a drag in capital efficiency.
  • Investing in Takisawa at today’s price entails betting on management to quickly improve operational efficiency while assuming higher capital spending in the automotive industry.
  • Overall, Takisawa is technologically competent, but with a few operational problems. With all the pros and cons in mind, Takisawa Machine Tool is worth considering at 114 Yen per share (vs. today’s 177 yen per share).

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6479: Minebea Mitsumi

Summary

  • Minebea Mitsumi is currently not a buy at 1,620 yen per share (5/9/2017 closing), but would be a compelling investment as 715 yen per share.
  • Key driver for Minebea Mitsumi is its Machine Component segment, particularly its industry-leading miniature ball bearing business.
  • Minebea Mitsumi’s investor sentiment is likely driven by explosive revenue growth in smart phone LED backlight business (50% CAGR between 2013-2016).
  • Key near-term drivers are: consistent performance in Machine Components, technological tail-end profits from smart phone LED backlights, and healthy Nintendo Switch sales.
  • Minebea Mitsumi was recently formed through the merger of Minebea and Mitsumi Electric.

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