Analyst Note| Richard Hilgert |
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.