Subaru (7270 JP) Company Update
Subaru has been among the hottest auto stock for many years, following an unparalleled success story in the US. More recently, however, rising US incentives and the vehicle inspection scandal in Japan have dampened enthusiasm for Subaru. Is it now time for a reassessment?Subaru’s low valuation (FY17E EV/OP 5.1x), high dividend yield (4.1%) and the prospect of two new model launches in the US in 2018 would suggest so.
However, auto analyst Julie Boote identifies several issues which could continue to haunt the automaker; among them a deteriorating sales performance of Subaru’s US passenger cars and ageing light trucks, limiting the upside created by the two new models; the potentially large negative consequences of the emission data falsification case in Japan; and Subaru’s high dependence on the US, with its increasingly deteriorating auto market.
SUBARU and its affiliates are mainly engaged in the manufacture and sale of automobiles and aerospace-related equipment. The Automobiles segment is engaged in the manufacture, sale and repair of passenger cars and their components under the name of "SUBARU." The Aerospace segment is engaged in the manufacture, sale and repair of commercial and defense aircrafts, helicopters, unmanned aerial vehicles and their components. In addition, Co. is engaged in the manufacture, sale and repair of generators, engine-equipped machinery, agricultural machinery, construction machinery and their components; the leasing of real estate; and the manufacture and sale of temporary houses.
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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