Nissan Turnaround Progress Shown in Q3 Results, Fiscal 2022 Guidance Tweaked; FVE Cut to JPY 1,450

No-moat-rated Nissan reported fiscal third-quarter 2022 (fiscal 2022 ends March 2023) earnings per share before special items of JPY 34.98, JPY 18.21 ahead of the FactSet consensus of JPY 16.77, and JPY 26.63 better than the JPY 8.35 reported a year ago when the chip crisis was at a peak. While automotive revenue increased 33% to JPY 2.58 trillion, consolidated volume slid 7%. The revenue percent change outperformed volume as average revenue per unit soared 42%. Pricing, mix, and favorable currency were partially offset by the chip shortage and China COVID-19 resurgence. We lowered our fair value estimate to JPY 1,450 from JPY 1,550 as the time value of money added JPY 40, while changes to our model subtracted JPY 140. The 5-star-rated Nissan shares currently trade at a 67% discount to our new fair value. For long-term investors with patience for a turnaround situation, we think the shares offer compelling value.