GS Yuasa - FY17 Q1 - Slowly Charging
Key Points
- Organic growth accounts for only 2-3% or roughly a quarter of management’s 11% YoY sales growth guidance for FY17.
- The acquisition of Panasonic’s (6752) lead acid battery business from H2 FY16 comprises 60-65% of FY17 guidance growth – just over ¥7bn of the ¥12.4bn increase in FY17 Q1 sales came from the Japan Panasonic lead acid battery business (China Panasonic business is consolidated from FY17 Q3), with half of the remaining growth from the weak yen;
- A conservative exchange rate of ¥105/USD is assumed in FY17 guidance, vs ¥109.4/USD actual in FY16.
- The biggest FY17 issue is the rising cost of lead.
- GS Yuasa holds 70% share of domestic auto battery market – with 20% from the Panasonic acquisition – and it is the 4th largest maker of lithium ion batteries (LiBs) globally.
- By customer, Toyota (7203) and Honda (7267) are the most important, though there was some Nissan (7201) business from last year.
- Next-generation LiBs are being developed with Lithium Energy Japan (51% GS, 46% Mitsubishi Corp (8058), 3% Mitsubishi Motors (MMC, 7211)).
- New lead battery plant in Tianjin China comes on-line early FY18.
- Improvement in battery margins led by the diffusion of EN batteries (European standard) and ISS (Idle-stop Start)-complementary.
- R&D is rising sharply for LiBs and will remain at least at FY17 levels for the next few years.
GS Yuasa is a holding company mainly engaged in the battery business. Co., through its subsidiaries and associated companies, is involved in the manufacture and sale of batteries, power-supply devices, illuminators and other electric equipment. Co.'s principal products include automotive and motorcycle battery, industrial battery, power supply system, lithium-ion battery, lighting equipment; ultraviolet system, special battery such as thermal battery and high energy density primary lithium battery, nickel-metal hydride battery, lithium-ion battery charger, power tools, oxygen sensor, gas generator, battery analyzer, membrane system, and others.
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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