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Investing.com - JPMorgan has initiated coverage on Nippon Chemi-Con (TYO:6997) with an Underweight rating and a price target of JPY1,150.00.
The firm notes that while Nippon Chemi-Con derives a higher proportion of its sales from aluminum electrolytic capacitors for ICT applications compared to competitor Nichicon, the company still faces significant financial risks.
JPMorgan believes Nichicon will also be able to fully benefit from a recovery in demand despite Nippon Chemi-Con’s stronger product lineup in the aluminum electrolytic capacitor segment.
The research firm specifically highlighted the ongoing lawsuit with Dyson as a major concern, noting that Dyson is seeking approximately £146 million in damages, equivalent to about ¥29 billion at ¥200/£ exchange rate.
JPMorgan concluded that Nippon Chemi-Con’s valuations appear high given that the potential damage to book value per share (BPS) from the lawsuit outweighs improvements in the company’s fundamentals.
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