Mazda (7261): Muted Recovery in FY17. Gamechanger Year FY18 Thanks to HCCI
The Nikkei published a preview of Mazda’s FY17 earnings forecast, which calls for OP of ¥150bil, +15% YoY. OP would be lowered by higher raw material costs (-¥15bil) and by currency losses (-¥15bil): Although Mazda's FY17 forex assumption of ¥108/USD suggests hardly any losses (FY16 average rate was ¥108.3/USD), other forex rates (e.g. GBP) and cross rates would add up as negatives.
On the positive side, FY17 group unit sales are forecast to rise 3% YoY (versus FY16CE growth of +1% YoY), on the back of an improvement in model mix thanks to the global roll-out of the second generation CX-5, plus the launch of a new SUV model in Japan. However, despite positive factors, the rise of just ¥20bil YoY in FY17 OP (FY16CE: ¥130bil) suggests Mazda is incorporating higher SG&A (marketing, incentives, R&D) into its forecast (this was not mentioned in the Nikkei preview), due to the more challenging sales situation in the US.
Key Points:
- The Nikkei preview on FY17 forecasts highlights improved model mix and unit sales growth...
- …however, FY17 is unlikely to be the year that shows a fully-fledged recovery.
- We highlight two main concerns: the high export ratio, and the high exposure to the passenger car market.
- Will the share price underperformance and low valuation (FY17 EV/OP 6.6x) find buyers?
- Anticipating more information on co-operation with Toyota
- FY18 may be the gamechanger year, with the launch of the new Mazda3 and Skyactiv 2, with its focus on the holy grail of internal combustion, Homogeneous Charge Compression Ignition (HCCI).
Mazda Motor and its affiliates are mainly engaged in the manufacture and sale of passenger and commercial vehicles. Co. provides compact vehicles, sports cars, sedans, mini vans, light cars, commercial vehicles, welfare vehicles and customized vehicles, as well as car accessories. Co.'s principal products are four-wheeled vehicles, gasoline reciprocating engines, diesel engines, and automatic and manual transmissions for vehicles. Co.'s principal brand automobiles include Demio, Axela, Atenza, CX-3, CX-5, CX-8, Roadster, Carol, Flair, Flair Wagon, Scrum Wagon, Bongo, Titan, Familia Van, and Scrum Van/Truck.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.