Company Honda Motor Co Ltd Ticker TSE: 7267 (Tokyo Stock Exchange) Sector Automobile, Financial Services, Motorcycle, Power Products & Other
Antipodes’ pick is Honda Motor Co Ltd (TSE: 7267), a company whose current multiple implies it is a lower tier automaker with limited prospects rather than a company in robust health for whom making cars is only its third most lucrative business.
Ahead of Honda’s auto segment are the motorcycle and financial services businesses. Honda makes up one quarter of all motorcycles sold globally, with a greater share in emerging and lower income economies. New emissions standards in India, the world’s largest market, will benefit Honda due to their even greater share of critical components via captive suppliers. Financial Services is Honda’s second largest source of earnings. This division proved its mettle during the 2008 Financial Crisis, with low charge offs a testament to the quality of underwriting-resilience that should repeat in 2020.
While Honda’s automobiles have a strong brand, equity margins have slid since 2002 due to poor execution. A new strategy to heal self-inflicted wounds, a management reshuffle and a refreshed model cycle should increase front-footedness in coming quarters. The evolving relationship with General Motors is also an exciting, yet sensible industrial tie up and another way to win.
Honda is in excellent financial health with a fortress balance sheet. The structural growth in the motorcycle business and targeted improvement in the automotive business should yield materially higher earnings over time, for which investors are paying a low multiple today. Summing Honda’s parts implies that the shares are materially undervalued, as at the current market price an investor could seemingly get any one of the main businesses for free. This is a significant buffer against potential risks associated with weaker auto demand or cyclical head winds to the structural growth of the motorcycle business. Honda meets Antipodes’ criteria for resilience, multiple ways of winning and margin of safety.
Figure 1 Honda value by division (JPY, Billions). Source: Factset
This information has been prepared and provided by Antipodes. To the extent that includes any financial product advice, the advice is of a general nature only and does not take into account any individual’s objectives, financial situation or particular needs. Before making an investment decision an individual should assess whether it meets their own needs and consult a financial advisor. This stock pick was published on 22 May 2020 and is subject to change.
Name Nameson
Donec sed odio dui. Vivamus sagittis lacus vel augue laoreet rutrum faucibus dolor auctor. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Etiam porta sem malesuada magna mollis euismod.
Morbi leo risus, porta ac consectetur ac, vestibulum at eros. Fusce dapibus, tellus ac cursus commodo, tortor mauris condimentum nibh, ut fermentum massa justo sit amet risus. Praesent commodo cursus magna, vel scelerisque nisl consectetur et. Sed posuere consectetur est at lobortis. Curabitur blandit tempus porttitor. Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Maecenas sed diam eget risus varius blandit sit amet non magna. Duis mollis, est non commodo luctus, nisi erat porttitor ligula, eget lacinia odio sem nec elit. Donec sed odio dui. Praesent commodo cursus magna, vel scelerisque nisl consectetur et. Duis mollis, est non commodo luctus, nisi erat porttitor ligula, eget lacinia odio sem nec elit.
Integer posuere erat a ante venenatis dapibus posuere velit aliquet. Nulla vitae elit libero, a pharetra augue. Fusce dapibus, tellus ac cursus commodo, tortor mauris condimentum nibh, ut fermentum massa justo sit amet risus. Duis mollis, est non commodo luctus, nisi erat porttitor ligula, eget lacinia odio sem nec elit. Donec id elit non mi porta gravida at eget metus.
Someone Else
Donec sed odio dui. Vivamus sagittis lacus vel augue laoreet rutrum faucibus dolor auctor. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Etiam porta sem malesuada magna mollis euismod.
Morbi leo risus, porta ac consectetur ac, vestibulum at eros. Fusce dapibus, tellus ac cursus commodo, tortor mauris condimentum nibh, ut fermentum massa justo sit amet risus. Praesent commodo cursus magna, vel scelerisque nisl consectetur et. Sed posuere consectetur est at lobortis. Curabitur blandit tempus porttitor. Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Maecenas sed diam eget risus varius blandit sit amet non magna. Duis mollis, est non commodo luctus, nisi erat porttitor ligula, eget lacinia odio sem nec elit. Donec sed odio dui. Praesent commodo cursus magna, vel scelerisque nisl consectetur et. Duis mollis, est non commodo luctus, nisi erat porttitor ligula, eget lacinia odio sem nec elit.
Integer posuere erat a ante venenatis dapibus posuere velit aliquet. Nulla vitae elit libero, a pharetra augue. Fusce dapibus, tellus ac cursus commodo, tortor mauris condimentum nibh, ut fermentum massa justo sit amet risus. Duis mollis, est non commodo luctus, nisi erat porttitor ligula, eget lacinia odio sem nec elit. Donec id elit non mi porta gravida at eget metus.
Donec sed odio dui. Vivamus sagittis lacus vel augue laoreet rutrum faucibus dolor auctor. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Etiam porta sem malesuada magna mollis euismod.
Morbi leo risus, porta ac consectetur ac, vestibulum at eros. Fusce dapibus, tellus ac cursus commodo, tortor mauris condimentum nibh, ut fermentum massa justo sit amet risus. Praesent commodo cursus magna, vel scelerisque nisl consectetur et. Sed posuere consectetur est at lobortis. Curabitur blandit tempus porttitor. Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Maecenas sed diam eget risus varius blandit sit amet non magna. Duis mollis, est non commodo luctus, nisi erat porttitor ligula, eget lacinia odio sem nec elit. Donec sed odio dui. Praesent commodo cursus magna, vel scelerisque nisl consectetur et. Duis mollis, est non commodo luctus, nisi erat porttitor ligula, eget lacinia odio sem nec elit.
Integer posuere erat a ante venenatis dapibus posuere velit aliquet. Nulla vitae elit libero, a pharetra augue. Fusce dapibus, tellus ac cursus commodo, tortor mauris condimentum nibh, ut fermentum massa justo sit amet risus. Duis mollis, est non commodo luctus, nisi erat porttitor ligula, eget lacinia odio sem nec elit. Donec id elit non mi porta gravida at eget metus.
James Cook
Donec sed odio dui. Vivamus sagittis lacus vel augue laoreet rutrum faucibus dolor auctor. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Etiam porta sem malesuada magna mollis euismod.
Morbi leo risus, porta ac consectetur ac, vestibulum at eros. Fusce dapibus, tellus ac cursus commodo, tortor mauris condimentum nibh, ut fermentum massa justo sit amet risus. Praesent commodo cursus magna, vel scelerisque nisl consectetur et. Sed posuere consectetur est at lobortis. Curabitur blandit tempus porttitor. Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Maecenas sed diam eget risus varius blandit sit amet non magna. Duis mollis, est non commodo luctus, nisi erat porttitor ligula, eget lacinia odio sem nec elit. Donec sed odio dui. Praesent commodo cursus magna, vel scelerisque nisl consectetur et. Duis mollis, est non commodo luctus, nisi erat porttitor ligula, eget lacinia odio sem nec elit.
Integer posuere erat a ante venenatis dapibus posuere velit aliquet. Nulla vitae elit libero, a pharetra augue. Fusce dapibus, tellus ac cursus commodo, tortor mauris condimentum nibh, ut fermentum massa justo sit amet risus. Duis mollis, est non commodo luctus, nisi erat porttitor ligula, eget lacinia odio sem nec elit. Donec id elit non mi porta gravida at eget metus.
