Eagle Investors: The Power of Positive Thinking

26 June 2021

Dear Fellow Investor,

Our technology shares listed on the KLSE are well supported despite the MCO, Covid fears and pervasive negative sentiment. Exports have been increasing as demand for semiconductors and technology related products are increasing worldwide. Well managed and financially solid Malaysian tech shares will leverage on these trends and expect new highs on these counters. Other sectors such as consumer and banking are lagging but as sentiment improves expect recovery.

Fears of higher interest rates by the US Federal Reserve receded and the Nasdaq broke a 6 months resistance last week making an all time high.

Weekly Nasdaq

I suspect foreign funds will see how undervalued some of the Malaysian technology shares are compared to US counterparts and come in to take advantage.

Dr. Mahathir made some positive and realistic comments in his Edge column today. He said vaccination is effective in reducing cases but more needs to be done for the rural areas. Management of the pandemic is not very good but it is improving. The government is listening and doing something but more needs to be done.

Based on statistics it was reported in the Edge that Malaysia has the 2^nd lowest Covid death rate in Asia at 0.65% or 4637 deaths out of 33 million while Singapore leads with 0.05 % or 35 deaths out of a population of 5.9 million. In contrast the UK, US, and Australia had much higher death rates as a percentage of population.

One of our core holdings is Nidec and Free Malaysia today reported on the company.

Nidec revs up EV motor growth with Chinese R&D centre

© Provided by Free Malaysia Today Nidec controls 5.5% of China’s EV motor market, the biggest slice for a foreign independent manufacturer. (AFP pic)

DALIAN: At Nidec’s state-of-the-art development centre for electric vehicle motors in Suzhou, near Shanghai, speedy work is crucial to winning and retaining often-impatient Chinese clients.

The development centre opened in September last year to produce prototypes tailored to customer needs. The process usually takes six months to a year, but some customers have asked it to be done in “a month and a half”.

Meeting such tight deadlines requires adequate human resources. The centre hired 170 staffers by June 1 and plans to boost the number to 250 by March next year.

Eager to tap the country’s burgeoning demand for electric vehicles, Nidec also plans to have 2,000 workers at an electric vehicle motor plant launched this spring in Dalian in northeast China.

Along with an existing Dalian plant that also produces other products, the total workforce in the city will swell 40% to 5,000.

Under Nidec’s development method, the base motor model that requires the most advanced technology, known as the “mother”, is developed in the Japanese prefecture of Shiga near the company’s headquarters in Kyoto.

Its design and output are then adjusted to each customer’s specification in a process handled by the new Suzhou centre.

Nidec has managed to fulfil seemingly impossible requests from customers, managing design work down to the hourly basis to meet deadlines. This method has at times enabled Nidec to steal customers away from its competitors.

“We’re tapping into our speedy operations to capture the growth market,” said Akitoshi Kato, who heads the Suzhou centre.

The centre prides itself on maintaining one of the industry’s most extensive testing facilities, where it simulates various conditions to test the motor’s endurance in high temperatures or in mud.

The new plant in Dalian now has just one building. But when combined with a planned second structure, it is expected to become the world’s largest motor factory, churning out the equivalent of 1 million EV motors a year.

“We’re planning to build a ‘supplier town’ around here, or a hub of about 20 related parts factories for EVs and other applications,” said Kazutsugu Igarashi, the head of the Dalian factory.

Nidec controls 5.5% of China’s EV motor market, the biggest slice for a foreign independent manufacturer, according to Mizuho Bank senior research officer Tang Jin.

The Japanese company ranks fourth in the market for drive systems, which include gears and inverters, at 15%.