Company Reports

No-moat-rated Nissan reported fiscal third-quarter 2023 earnings per share of JPY 7.54, well below the JPY 15.51 FactSet consensus, and down JPY 27.44 from the JPY 34.98 reported a year ago as supply chain disruptions, inflationary cost pressures, lower China joint venture equity income, and unfavorable mix offset consolidated volume gains. While automotive revenue rose 9% to JPY 2.87 trillion, consolidated volume was 15% higher with a 5% decline in average revenue per unit. Increased volume, pricing, and favorable currency supported revenue growth.

Nissan is part of the Renault-Nissan-Mitsubishi Alliance. The firm is 43.4% owned by Renault, while Nissan owns 15% of Renault. However, under the new alliance agreement reached July 2023, Renault will transfer 28.4% ownership into a French trust which will vote the shares neutrally. Nissan's 15% ownership in Renault will gain voting rights and both Renault's and Nissan's ownership voting rights will be capped at 15% each. Also, Nissan holds a controlling 34% stake in Mitsubishi Motors. Nissan's cross-ownership with Renault had been viewed as a rare success, with few international automotive companies replicating the alliance. However, discontent among leadership between Nissan and Renault became evident with the dismissal of Carlos Ghosn on allegations of misconduct in November 2018. Despite the opportunity for economies of scale in the alliance, Nissan's recent performance had been dismal but is now improving.

No-moat-rated Nissan reported fiscal second-quarter 2023 earnings per share of JPY 48.71, blowing past the JPY 22.26 FactSet consensus, and up JPY 38.12 from the JPY 10.59 reported a year ago as supply chain disruptions improved, and turnaround progress continued. While automotive revenue jumped 27% to JPY 2.87 trillion, consolidated volume was 27% higher on virtually flat average revenue per unit. Increased volume, better pricing, improved mix, and favorable currency supported revenue growth. The 5-star-rated Nissan shares currently trade at a compelling 57% discount to our unchanged JPY 1,490 fair value estimate.

Nissan is part of the Renault-Nissan-Mitsubishi Alliance. The firm is 43.4% owned by Renault, while Nissan owns 15% of Renault. However, under the new alliance agreement reached July 2023, Renault will transfer 28.4% ownership into a French trust which will vote the shares neutrally. Nissan's 15% ownership in Renault will gain voting rights and both Renault's and Nissan's ownership voting rights will be capped at 15% each. Also, Nissan holds a controlling 34% stake in Mitsubishi Motors. Nissan's cross-ownership with Renault had been viewed as a rare success, with few international automotive companies replicating the alliance. However, discontent among leadership between Nissan and Renault became evident with the dismissal of Carlos Ghosn on allegations of misconduct in November 2018. Despite the opportunity for economies of scale in the alliance, Nissan's recent performance had been dismal but is now improving.

Nissan is part of the Renault-Nissan-Mitsubishi Alliance. The firm is 43.4% owned by Renault, while Nissan owns 15% of Renault. However, under the new alliance agreement reached July 2023, Renault will transfer 28.4% ownership into a French trust which will vote the shares neutrally. Nissan's 15% ownership in Renault will gain voting rights and both Renault's and Nissan's ownership voting rights will be capped at 15% each. Also, Nissan holds a controlling 34% stake in Mitsubishi Motors. Nissan's cross-ownership with Renault had been viewed as a rare success, with few international automotive companies replicating the alliance. However, discontent among leadership between Nissan and Renault became evident with the dismissal of Carlos Ghosn on allegations of misconduct in November 2018. Despite the opportunity for economies of scale in the alliance, Nissan's recent performance had been dismal but is now improving.

No-moat-rated Nissan reported fiscal first-quarter 2022 (ended June 30, 2023) earnings per share of JPY 26.93, better than the JPY 20.52 FactSet consensus by JPY 6.41, and up JPY 14.89 from the JPY 12.04 reported a year ago as the chip shortage improved and turnaround progress continues. While automotive revenue soared 40% to JPY 2.63 trillion, consolidated volume was 20% higher and average revenue per unit jumped 13%. Pricing, mix, and favorable currency were partially offset by the chip shortage. The 5-star-rated Nissan shares currently trade at a 56% discount to our unchanged JPY 1,490 fair value estimate. For long-term investors with patience for a turnaround situation, we think the shares offer compelling value.

Nissan is part of the Renault-Nissan-Mitsubishi Alliance. The firm is 43.4% owned by Renault, while Nissan owns 15% of Renault. Also, Nissan holds a controlling 34% stake in Mitsubishi Motors. Nissan's cross-ownership with Renault had been viewed as a rare success, with few international automotive companies replicating the alliance. However, discontent among leadership between Nissan and Renault became evident with the dismissal of Carlos Ghosn on allegations of misconduct in November 2018. Despite the opportunity for economies of scale in the alliance, Nissan's recent performance has been dismal but improving.

No-moat-rated Renault raised its 2023 guidance from at least 6% operating margin and at least EUR 2.0 billion in automotive operational free cash flow to 7%-8% margin and at least EUR 2.5 billion cash flow. Management said the improved outlook was attributable to the turnaround plan, focusing on value over volume. The firm said that pricing and product mix as well as variable cost increases have been more favorable than expected. New guidance assumes the same volume as the previous, with Europe up low-single digits while Eurasia and Latin America are flat, respectively.

Nissan is part of the Renault-Nissan-Mitsubishi Alliance. The firm is 43.4% owned by Renault, while Nissan owns 15% of Renault. Also, Nissan holds a controlling 34% stake in Mitsubishi Motors. Nissan's cross-ownership with Renault had been viewed as a rare success, with few international automotive companies replicating the alliance. However, discontent among leadership between Nissan and Renault became evident with the dismissal of Carlos Ghosn on allegations of misconduct in November 2018. Despite the opportunity for economies of scale in the alliance, Nissan's recent performance has been dismal but improving.

No-moat-rated Nissan reported fiscal fourth-quarter 2022 (ended March 31, 2023) earnings per share of JPY 27.28, trouncing the JPY 10.47 FactSet consensus by JPY 16.81, and JPY 23.66 better than the JPY 3.62 reported a year ago when the chip crisis was at a peak. While automotive revenue soared 41% to JPY 2.84 trillion, consolidated volume was 13% higher and average revenue per unit jumped 21%. Pricing, mix, and favorable currency were partially offset by the chip shortage and COVID-19 resurgence in China. We raised our fair value estimate to JPY 1,490 from JPY 1,450 as the time value of money added JPY 30, while changes to our model added JPY 10. The 5-star-rated Nissan shares currently trade at a 66% discount to our new fair value. For long-term investors with patience for a turnaround situation, we think the shares offer compelling value.

Nissan is part of the Renault-Nissan-Mitsubishi Alliance. The firm is 43.4% owned by Renault, while Nissan owns 15% of Renault. Also, Nissan holds a controlling 34% stake in Mitsubishi Motors. Nissan's cross-ownership with Renault had been viewed as a rare success, with few international automotive companies replicating the alliance. However, discontent among leadership between Nissan and Renault became evident with the dismissal of Carlos Ghosn on allegations of misconduct in November 2018. Despite the opportunity for economies of scale in the alliance, Nissan's recent performance has been dismal but improving.

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.

Nissan is part of the Renault-Nissan-Mitsubishi Alliance. The firm is 43.4% owned by Renault, while Nissan owns 15% of Renault. Also, Nissan holds a controlling 34% stake in Mitsubishi Motors. Nissan's cross-ownership with Renault had been viewed as a rare success, with few international automotive companies replicating the alliance. However, discontent among leadership between Nissan and Renault became evident with the dismissal of Carlos Ghosn on allegations of misconduct in November 2018. Despite the opportunity for economies of scale in the alliance, Nissan's recent performance has been dismal but improving.

Renault, Nissan, and Mitsubishi held a joint conference on Feb. 6 that provided additional details about the framework agreement to rebalance the alliance following the announcement on Jan. 30 (see our note dated the same day). We liked how management characterized the new alliance framework, in which the relationships among the members would be based on equal input and proposed projects that each company could participate in to its respective benefit, compared with the prior alliance framework, in which compromise on projects led to less-than-optimal returns for each member. Under the previous arrangement, potential synergies were identified for the partners, which then had to execute. Under the new framework, partners identify where they want to execute strategy and invite other partners to join, with synergies a result of the collaboration.

Subject to board of directors approval, Renault announced it had reached an agreement with alliance partner Nissan, in which cross-shareholding would be equalized, Nissan would make an investment in Ampere, and alliance operational projects are identified. Ever since the arrest of Carlos Ghosn in 2018, both management teams have been distracted by areas of contention within the alliance. While both companies have made substantial turnaround progress, we see the agreement as an important step to further improve performance, enabling the alliance to better leverage its existing economies-of-scale as management focuses attention on operations instead of internal conflict. The 5-star, no-moat-rated shares of Renault are attractively valued, currently trading at a 54% discount to our EUR 83 fair value estimate. No-moat, 5-star-rated Nissan shares trade at a compelling 71% discount to our JPY 1,550 fair value.

No-moat-rated Nissan reported fiscal second-quarter 2022 (fiscal year 2022 ends March 2023) earnings per share before special items of JPY 10.59, missing the FactSet consensus of JPY 13.14 by JPY 2.55 and JPY 3.24 lower than the JPY 13.83 reported a year ago due to a slight increase in shares and higher tax rate. While automotive revenue increased 35% to JPY 2.27 trillion, consolidated volume plunged 16% to 502,967 vehicles. The revenue percent change outperformed volume as average revenue per unit soared 61%. Pricing, mix, and favorable currency were partially offset by the Ukraine crisis, chip shortage, and China COVID-19 lockdowns. Consolidated revenue of JPY 2.52 trillion also beat consensus of JPY 2.37 trillion by 7%. Due to the time value of money and changes to our model, we raised our fair value estimate to JPY 1,550 from JPY 1,490. The 5-star-rated Nissan shares currently trade at a 68% discount to our new fair value. For long-term investors with patience for a turnaround situation, we think the shares offer compelling value.

Nissan is part of the Renault-Nissan-Mitsubishi Alliance. The firm is 43.4% owned by Renault, while Nissan owns 15% of Renault. Also, Nissan holds a controlling 34% stake in Mitsubishi Motors. Nissan's cross-ownership with Renault had been viewed as a rare success, with few international automotive companies replicating the alliance. However, discontent among leadership between Nissan and Renault became evident with the dismissal of Carlos Ghosn on allegations of misconduct in November 2018. Despite the opportunity for economies of scale in the alliance, Nissan's recent performance has been dismal but improving.

No-moat-rated Nissan reported fiscal first-quarter 2022 (fiscal year 2022 ends March 2023) earnings per share of JPY 12.04, beating the FactSet consensus EPS of JPY 9.93 by JPY 2.11 and JPY 2.21 higher than the JPY 9.81 (excluding special items) reported in the year-ago period. While automotive revenue increased 8% to JPY 1.88 trillion, consolidated volume plunged 25% to 520,374 vehicles. The revenue percent change outperformed volume as average revenue per unit jumped 45%. Pricing, mix, and favorable currency were partially offset by the Ukraine crisis, chip shortage, and China COVID-19 lockdowns. Consolidated revenue of JPY 2.14 trillion also beat consensus of JPY 2.08 trillion. Consolidated operating profit of JPY 64.9 billion was down 14% from JPY 75.7 billion a year ago as financial services operating profit dropped 11%. However, automotive operating profit doubled, albeit from a low base, to JPY 12.0 billion from JPY 6.0 billion last year as turnaround efforts were partially offset by higher costs including raw materials, energy, logistics, and other inflationary pressures.

Nissan is part of the Renault-Nissan-Mitsubishi Alliance. The firm is 43.4% owned by Renault, while Nissan owns 15% of Renault. Also, Nissan holds a controlling 34% stake in Mitsubishi Motors. Nissan's cross-ownership with Renault had been viewed as a rare success, with few international automotive companies replicating the alliance. However, discontent among leadership between Nissan and Renault became evident with the dismissal of Carlos Ghosn on allegations of misconduct in November 2018. Despite the opportunity for economies of scale in the alliance, Nissan's recent performance has been dismal but improving.

Nissan is part of the Renault-Nissan-Mitsubishi Alliance. The firm is 43.4% owned by Renault, while Nissan owns 15% of Renault. Also, Nissan holds a controlling 34% stake in Mitsubishi Motors. Nissan's cross-ownership with Renault had been viewed as a rare success, with few international automotive companies replicating the alliance. However, discontent among leadership between Nissan and Renault became evident with the dismissal of Carlos Ghosn on allegations of misconduct in November 2018. Despite the opportunity for economies of scale in the alliance, Nissan's recent performance has been dismal but improving.