Toyota (7203) – Low Expectations Could Create Opportunity
Despite seeing no improvement in North America, we expect Toyota to surprise on the upside with its FYQ1 earnings as well as with its full year performance. This is thanks to the strong sales of the new C-HR, the increasing popularity of hybrids in Europe, and with better than expected performance in some of the other regions. Sentiment, which has been negative, should improve on better than predicted results and a likely earnings upgrade.
Key Points
- Toyota’s assumptions for FY17 consolidated unit sales call for a decline of 0.8% YoY, but we anticipate an increase of 1.9% YoY thanks to the new C-HR.
- The company’s currency and raw material assumptions are conservative.
- Sentiment is improving with regard to trade deals and the relationship with the US Government.
- We expect an upgrade to the full year earnings when the FY17 Q1 results are announced on August 4th, which may trigger renewed interest in the shares, given the underperformance YTD.
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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