The Zhitong Finance App learned that the stock price of Japanese precision motor and industrial equipment manufacturer Nidec fell 9.3%, approaching the 11-month low set earlier this month. Previously, UBS downgraded the stock's rating from “buy” to “neutral,” and the target price was lowered from 2,800 yen to 2,400 yen, on the grounds that the market environment was more severe. UBS also lowered its operating profit forecast for the current fiscal year and the next fiscal year, which were 16% and 22% lower than the general market expectations, respectively.
UBS analysts Shingo Hirata and Kohei Takahashi said in an October 8 report that this reduction reflects a more cautious view of the pace of recovery. The reasons include overcapacity for home appliances, increased competition, and the heavy burden of fixed costs on industrial motors.
They also said that although Nidec has always emphasized its efforts to improve corporate governance, huge impairment expenses, management changes, and three consecutive reports from auditors that cannot express an opinion mean that it may take time for the company to regain confidence in the capital market.
Since a huge impairment charge was announced at the end of September, Nidec's stock price has continued to plummet. The impairment almost erased all of the company's profits over the past ten years.
UBS analysts said that key issues to focus on include whether Nidec can obtain an audit opinion by the end of October, submit an internal control report, submit a semi-annual report in November, and announce the mid-term business plan in December.