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Nissan Motor Co.,Ltd Hirota Seminar 10th Ito, Kobayashi, Nakatani, Cyo
Stock Code: 7201
Stock Price (09/05/2014): ¥1020
Target Price: ¥1209
Stock Rating: BUY
Index I. Investment Summary
II. Company Overview
III. Description of Business and Overseas Business
IV. Competitive Strategy
V. Future Forecast
VI. Valuation
VII. Risk Factors
I. Investment Summary
The target stock price of NISSAN MOTOR CORPORATION (hereafter, Nissan)
is estimated at ¥1209with the Discounted Cash Flow method (hereafter, DCF method).
It is 18.5% higher than current stock price¥1020 (09/05/2014). Therefore, the
investment recommendation of Nissan is "BUY".
We have two reasons which conclude this result. First, we forecast that Electric
Vehicle (hereafter, EV) market, which is Nissan’s strong point, will expand more in the
future. Second, Nissan can develop its share with cost-cut and low-vehicle price.In this
way, we concluded that Nissan would continue to make a profit in the future.Figure.1
shows the forecast in the next 10 years.
Figure.1
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Sales amount and Profit
Sales(Past record, L axis)
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Net income before income tax(Past record, R axis)
Net income before income tax(Forecast, R axis)
Net income(Past record, R axis)
Net income(Forecast, R axis)
7201 NISSAN（Million Yen） （Million Yen）
II. Company Overview
《History of Nissan》
Since the foundation in 1933, Nissan had importedthe car blueprints and the facilities
from the foreign companies. As a result, Nissan’s technology was appreciated well
worldwide and Nissan began to be called “Nissan of technology”. After that, Nissan
played a pioneering role as “Nissan of technology”, for example, the exploitation of the
fuel-efficient vehicle, the combustion control of engine, the industrial robot and so on.
However, Nissan began to lose ‘Toyota of marketing’ because of inferiority of marketing
and sales strategy. In 1980s, the gap of the sales amountbetween two companies was
becoming larger. Nissan couldnot improvethe sales result, had two trillion debts,and
faced the crisis of the bankruptcy. In 1999, Nissan and Renault, which is the automobile
company in France, established Renault-Nissan alliance. Althogh Nissan helps
Renault’s sales and this situation is not good, Nissan cannot achieve their goal without
Renault because of Ghosn and Europe market in the future. Therefore, This
Renault-Nissan alliance is very important for Nissan.
Carlos Ghosn from Renault became COO of Nissan and held up the
commitments. The commitments are cost-cut by destroying Keiretsu(group-company),
factory closure, and layoff employees, promoting global business, and investment innew
vehicle models. He achieved them and continued to improve the sales result. However,
the sales amount remarkably went down because of the financial crisis, the worldwide
recession, and strong yen in 2008.Nissan overcome them andthe sales amount reached
the level before 2008.
《Results》
Nissan is at the third place among Japanese automobile companies’ sales
amount. Figure.2 and Figure.3 are the graphs of the sales amount and the operating
profit on sales. Nissan, Toyota, and Honda recovered the sales amount after 2008.
However, only Nissan could not recover the operating profit on sales. We have two
reasons. First is Nissan’s global strategy. Nissan has focused on the global market. The
investment in the emerging countries is unefficient from the view of the profit. The auto
sales in 2013 increased by more than two million than 2005, which is the year that the
operating profit on sales was over 10%. Therefore,we think that Nissan’s operating
profit on sales will be recovered in the future. Second is Nissan’s Research and
Development expenses. Nissan has invested in EV earlier than other automobile
companies, but the result of EV is under the prediction. If the EV market develop in the
future, Nissan can recover the operating profit on sales.
Figure.2
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NISSAN
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Figure.3
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NISSAN
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HONDA
《Manager》
Nissan’s manager is Carlos Ghosn. He took office as COO afterRenault-Nissan
alliance in 1999. Ghosn showed “Nissan Revival Plan” to the employees and investors.
He achieved it and Nissan’s net income recovered from minus seven hundred billion in
1999 to plus 2.8 hundred billion. The factors of this success are the top-down
management by Ghosn, for example, cost-cut by the factory closure and the layoff
employees. In addition, he did not think little of “Japanese management,” for example,
visiting Nissan’s factory and talking to the employees directly.
He became CEO in 2001. The reconstruction of Nissan was highly
appreciated.He also held the post of CEO of Renault since 2005.
However there are some criticisms ofGhosn. First is Ghosn’s too high pay.
Ghosn’s pay is about one billion although Toyota’s one is 2.3 hundred million. The
stockholders criticized Ghosn of the pay, but he explained, “Nissan is a global company.
Comparing with the CEO in foreign countries, my pay is not too high and Japanese
standard should not interrupt the globalization of Japanese companies.
Second is the relationship with Renault whose result is not good. The net
income of Renault in 2013 is in the red without Nissan’s equity profit. Recently, Nissan
announced that it would produce the next-model vehicles in Renault’s factories but it
will be more cost for Nissan, comparing with using Nissan’s factories in the developing
countries.
Third is the criticism for Ghosn’s dictatorship. He abolished COO this year.
Some think that Ghosn want to handle Nissan only by himself. Moreover, he fired COO
of Renault.
Although there are some criticisms ofGhosn, we concludethat he is necessary
for Nissan because he has an outstanding nature as a manager who can judge things
and put a lot of energy to become successful.
III. Description of Business and Global Business
《Description of Business》
The main business of Nissan is automobile, which accounts for about 93% of
sales amount, so we analyzedonly automobile business in this report. The introduction
of Nissan’s three brand and EV is as follows.
・Nissan: Main bland of Nissan
・Infinity: High-class car blandexpanding in over 40 countries except Japan
・Datsun: Compact car bland mainly in emerging countries
・EV:
Nissan is at the top in the world EV market. This is because Nissan has
focused on EV for a long time and succeeded in low price with battery-lease system.
Nissan is puttingan effort into research and development for improvingthe performance
and more cost-cut.
Nissan has a pioneering advantage in EV business such as a plentiful data of
EV. Nissan records EV users’ data with the internet. It takes a long time to get the data,
so other companies cannot imitate soon. Nissan will use this data for the next
technological innovation such as battery miniaturization and reducing the charging
time. Adding to this, Nissan is famous in the world and other automobile companies are
focusing on other eco-friendly cars such as Hybrid Vehicle (hereafter, HV) or Hydrogen
Vehicle.Therefore, we concluded thatNissan can keep this pioneering advantage in the
future.
《Overseas Business》
Overseas business accounts for 80% of sales amount and the ratio is increasing
year by year. (Figure.4) Figure.5 shows that the number of the auto sales in the world is
also increasing. In this way, overseas business is very important for Nissan.
Figure.4
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Domestic business
Overseas business
(%)
Figure.5
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(%)(thousand)
In this report, we divide four areas such as Japan, North America, Europe, and
Emerging countries.
Japan
The saleof compact carsor light vehicles is going well, especially “Note” and
“Days”. However, recently Nissan’s share does not increase as expected. The reason is
that Nissan does not give high priority to HV although HV market is increasing in
Japan. Although the number of sales fell down because of the financial crisis, the
worldwide recession, and strong yen in 2008and the Great East Japan Earthquake in
2011,ithas already recovered.
Figure.6
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Sales amount(L axis)
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（hundred million） （thousand）
Nissan
Figure.7
North America
Nissanstarted to sell Datsun in 1960. Nissan’s main products in North America
arecars with high mobility such asRogue and Altima. Nissan promotes local production
in North America. Sales amount fell down in 2008, but it recovered.
Figure.8
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Figure.9
Europe
The mainproductsare Sedan JUKE and QASHQAI.Nissan uses the
commondistribution system withRenault andit strengthensNissan’s sales network.
Figure.10
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Nissan
Figure.11
Emerging Countries
Nissan expands its businessmainly in BRICs and promotes local
production.This is because this market is growing up year by year and laboror land cost
is cheaper than developed countries.
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Figure.12
Figure.13
※This data is about only China, Brazil, and India.
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IV. Competitive Strategy
Nissan has two strong points. The one is the present cost-cut system and the
other is the success of EV.
First, the present cost-cut systemstarted whenGhosn became COO of Nissan in
order to help Nissan’s business. For instance, Nissan closed unprofitable factories and
fired the employees and recovered the result. Also, Nissan succeeded in holding down
cost by destroying Keiretsu(group-company) and rebuilding supply chain. If there is an
unprofitable factory, the company goes the closedown as a last resort and leads to
cost-cut even now. Then, the company can invest in a profitable business.
As for the Keiretsu destruction, there is the negative view that it makes the
construction of the joint development system beyond the fence of each companypeculiar
to grinding industrybe difficult.However, we appreciate it well because destroying
Keiretsuraised competitivenessamongKeiretsusubsidiaries.Theyhave to get their
businesseswith own power, destroying the conventional system. As a result,
Keiretsusubsidiaries are conscious of producing better and cheapercomponents and
become competitive.This leads tothe success of the cost-cut.
Nissan investsthe surplus fund by cost-cut inthe revivalpopular car-modelsin
old days because there are a lot of core fans of the popular carsuch as fair lady Z.This
investment makes the core fans come back to Nissan.
Recently, Nissan fixes the local production system for the global expansion.
This also leads to cost-cut. Above all, the construction of the local production system in
Chinaearlier than Toyota can be a factor to get much share in China which has a
potential forthe drastic growth in the future.
Second, as for EV, Nissan leaf (EV’s name) isat the top in EV market all around
the world. Nissan leafhas pioneering advantages such asthe price and the performance.
Nissanhas focused on EV for a long time, so ithas been behind the other companies in
the HV market. However, it canbe said that the potential for future growth of the EV
market is huge. Moreover, Nissan assumes thatthe know-how of EV leads to the
next-generation car such as all-automatic cars in the future.
Finally,Nissan’s cost-cut systemwas establishedwhen it was on the verge of
bankruptcy. Therefore, we conclude that other companies do not take a similar strategy
easily. In addition,Toyota thinks a great deal ofKeiretsusubsidiaries, so Toyota will not
destruct Keiretsuin the future.As for EV business, other automobile companies have not
invested EV but HV. They cannot change the main eco-friendly vehicle from HV to EV
because they do not have enough data and technology. Thus, it can be said that Nissan’s
cost-cut systemby Ghosn and EV business cannot be easily imitatedbyother companies.
V. Future Forecast
Based on the above-mentioned, we forecasts Nissan’s sales amount for 10 years.
In this report, we calculated the sales amount in eachareaz(Japan, North America,
Europe, and Emerging countries)with the following formulaand the sum is Nissan’s
sales amount.
The sales amount of this year＝the sales amountof last year
×the growth rate of automobile market
×the growth rate of Nissan’s share
When we calculatedthe future sales amount in each area, we reflected the
prediction of EV business only in Japan and Europe. This is because HV and common
cars are advantageous than EV in North America and developing countries.Long travel
distance is an important factor for people in two areas and EV is unsuitable.
The unit sales of EV is 120,000 in 2013 and it is predicted that it will be
2,800,000 in 2030 at an annual rate of130%. The unit salesof EV is 0.14% of all auto
sales in the world in 2013. Then, we assume that the growth rate of EV market is
0.182% (the growth rate of unit sales of EV ×the ratio of EV in auto sales all around the
world).
【Japan】
▼Market: 0%
After financial crisis in 2008, the automobile market in Japanhas grown up by
about 21% and recovered the standard level of the sales amount before 2008. Although
GDP has increased at an annual rate of1% and the automobile market has grown at an
annual rate of0.03%, we predict that Japanese market will remain at the same level for
the next ten years because of the decrease ofthe productive population.
▼Growth rate of Nissan’s share: +0.182%
Recently, Nissan’s share is not in a good situation. One of the reasons is that
they fall behind the recent eco-friendly car boom because they do not focus on HV. In
addition, the other reason is that the customersfor the low-price products such as a
compact-car or the light car moved to Honda because it discountedthe price of “FIT”, HV.
However, we expect that EV market will grow up in the future and we suppose 0.182%
of the growth rate of EV marketasthe growth rate of Nissan’s share.
【North America】
▼Market: 0%
The automobile market in North Americais recovering from the financial crisis
in 2008. Since 2008, the market has grown by 31.5% and at an annual rate of5.9%. It is
expected that an annual growth rate of GDP is 1.8%, and the population will increase at
an annual growth rate of 1.17%. However, the automobile market in North America is
too matured and we cannot expect more expansion in the future. Therefore, we predict
that the market growth will remain at the same level.
▼Growth rate of Nissan’s share: +0.24%
Nissan strengthens the local production and thestock situation is better than
Toyota and Honda in this area, so Nissanhas increasedits share smoothly. The good
stock situation leads tothe reduction of the cost for the transportation and the useless
inventory. In this way, the stock situation is related to the business result.We think that
the company will increase the sharein the future. Thus, the growth rate of Nissan’s
share is 0.24% (the average of an annual rate of the growth rate of Nissan’s share for
the last 10 years).
【Europe】
▼Market: -1.5%
The automobile market is gradually shrinking after the financial crisis in 2008.
The average of GDP growth rate in the last five years is in a negative state. Although
the population tends to increase, the unemployment rate is 12%. Considering these, we
predict that the growth rate of automobile market is -1.5% (the average of an annual
rate of the growth rate of the automobile market for the last 10 years).
▼Growth rate of Nissan’s share: +0.182%
Nissan’s share in Europe will increase in the future. There are two reasons.
First, Nissan’s share in Europe is increasing although theautomobile market in this
area has been shrinking since 2008. Second, EV marketwill expand in Europe.Therefore,
the annual growth rate of Nissan’s share is 0.182%.
【Emerging countries】
We focus on China, Brazil, and India to analyze emerging countries.
▼Market: +13.3%
●China
The automobile market in China has kept growing without the effect of the
financial crisis in 2008. GDP is growing at an annual rateof 10%. We expect that the
number ofdriverswill increase and the income level will be high in the future. Therefore,
we suppose 18.4% (the average of annual rateof the growth rate of the automobile
market for the last 10 years) as the growth rate of the automobile market.
●Brazil
The automobile industryaccounts forover 25% of the Brazil’s GDP.Although the
automobile market in Brazil has kept growing over 10% every year in the past 10 years,
itshrank for the first time in 2013 because of the recession. The domestic economic
situation is serious, so we set 1.23% (the average of annual rate of the growth rate of the
automobile market for the lastthree years) as the growth rate of the automobile market.
●India
India has been suffered from inflation, weak currency, and undeveloped
business environmental. However, Indian economy started to have a hope whenModi,
who has receiveda high reputation ofthe economic field, became the Prime Minister of
India in 2014. We expect that the number ofdriverswill increase and the income level
will be high in the future. Therefore, we suppose 10.9% (the average of annual rate of
the growth rate of the automobile market for the last 10 years) as the growth rate of the
automobile market.
13.3% (the average of the numbers of China, Brazil, and India) is the growth
rate of the automobile market in emerging countries.
▼Growth rate of Nissan’s share: +0.16%
●China
In China, Nissan’s strong points are high quality and low price, which
European and local companies can’t imitate. Nissan produces the carswith 40%off
components and Nissan succeeds in the reduction of the cost andthe improvement of the
fuel-efficiency. In addition to this, the local joint ventures do development and supply
task and Nissan usesthe full-depreciated facilities. In this way, Nissan cando cost-down
and achieve 20% lower-price than other companies. However, Nissan is still atsixth
place in Chinese market and cannot threaten VW and GM, so we suppose that the
growth rate of Nissan’s share is flat.
●Brazil
FourEuropean companies, for example, Fiat in Italy and Ford,account for
about 70% of the automobile market in Brazil. On the other hand, the market share of
Nissan is only2%. We cannot expect Nissan’s large growth and we suppose0.3% (the
average of annual rate of the growth rate of Nissan’s share for the last 10 years) as the
growth rate of Nissan’s share.
●India
Suzuki and Hyundai occupy 50% of the market. Nissan has promoted the local
production with over 100 local suppliers and developedlow-price Datsun for family.
However, Suzuki’s car is cheaper, so it is difficult for Nissan to get more its share. We
suppose0.2% (the average of annual rate of the growth rate of Nissan’s share for the
lastfive years) as the growth rate of Nissan’s share.
0.16% (the average of the numbers of China, Brazil, and India) is the growth
rate of Nissan’s share in emerging countries
Figure.13 shows the past results (2004-2013) and the forecast (2014-2023).
Figure.14
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Emerging countries
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North America
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（Million Yen）
VI. Valuation
The target stock priceis estimatedas follows. First, wecalculate the future free
cash flow (hereafter, FCF) in the next10 years and the continuation value after 10 years.
Second, we calculate Nissan’s firm value by discounting them with the Weighted
Average Cost of Capital (hereafter, WACC). Lastly, we divide Nissan’s firm value by the
number of stock issued.
As a result, the target stock price is estimated at ¥1209. The target stock price
is 18.5% higher than the current stock price ¥1020. Therefore, our investment
recommendation is “BUY”.
The numberforcalculatingthetarget price with DCF is as follows and
Figure.7-11.
VII. Risk Factors
Our investment recommendation is “BUY” because we forecastthat Nissan will
increase sales amount in the future. However, Nissan has a market risk and a specific
risk that may affect its future sales amount.
Risk Free Rate 0.537%
10-year government bonds (7/14/2014)
β 1.06
Regression: the monthly rate of return of
TOPIX and Nissan’s stock
(Date:2009.7-2014.6)
Risk Premium 6%
Debt Cost 0.011
Interest expense in 2013/the average of
debt with interestin 2012-2013.
Effective tax rate 32.4% (expectation)
Selling, general, and administrative cost Figure.11
Depreciation cost Figure.11
Working capital Figure.11
Capital investment 7.9%
The ratio of the capital investment in
sales amount
(2008-2013)
Permanent growth rate 1%
As risks of an automobile market, there are the economic risk, the resource
energy risk, and the exchange risk. These risks occur suddenly and it is difficult for
companies to handle with them. In fact, Nissan was suffered fromthe financial crisis,
the worldwide recession, and strong yen in 2008. Ifa macroeconomicthing happens in
the future, Nissan will be affected.
Nissan’s specific risk is Carlos Ghosn. He has been the key-manof Nissan for 15
years, but he is 60 years old. The average age of the CEO of companies in Japan is 59.
He is not too old, but there is some possibility that the CEO of Nissan changesin the
next 10 years. It is not too much to saythat Nissan depends on Ghosn’s strong
leadership, so the change of CEO has big effect on Nissan.
In this way, our investment recommendation can be changed by these risk
factors.
Figure.15 Balance Sheet（Assets）
（Million Yen） 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E
Current Asset 5580410 6345835 6610072 7214518 8609278 8777740 8965733 9176160 9548326 9982611 10453597 10965545 11523317 12132446 12799217
Cash and deposits 802410 998822 765423 604357 822863 891185 966227 1049102 1094742 1146608 1205535 1272470 1348488 1434808 1532816
Excess cash 0 0 0 0 0 0 0 0 199120 436754 684317 942479 1212028 1493871 1789041
Notes and account receivable 641154 738950 820008 583112 785954 828794 876425 929578 970018 1015975 1068189 1127498 1194855 1271341 1358183
Selling financial credit 2645853 2746836 3210342 4161925 5033558 5033558 5033558 5033558 5033558 5033558 5033558 5033558 5033558 5033558 5033558
Securities 50641 158012 77476 107652 13470 13470 13470 13470 13470 13470 13470 13470 13470 13470 13470
Inventories 802278 982233 1018966 1045259 1151851 1194886 1243512 1298502 1354992 1419188 1492123 1574970 1669060 1775901 1897209
Deferred tax assets（current） 229093 283789 266540 244133 210395 210395 210395 210395 210395 210395 210395 210395 210395 210395 210395
Other current asset 500434 519148 506947 511744 650143 664408 681102 700512 730987 765619 804966 849660 900419 958058 1023500
Allowance for doubtful accounts（▲）（current） -91453 -81955 -55630 -43664 -58956 -58956 -58956 -58956 -58956 -58956 -58956 -58956 -58956 -58956 -58956
Fixed assets 4634410 4390858 4461981 5227819 6094125 6284069 6463244 6637212 6820120 7019132 7237393 7478253 7745343 8042641 8374549
Tangible assets 3858129 3637042 3731246 4182338 4758038 4947021 5125186 5298093 5479889 5677732 5894765 6134337 6400074 6695951 7026367
Depreciable assets 2660820 2486894 2490198 2865342 3273903 3455597 3626582 3792682 3931832 4084652 4254048 4443105 4655152 4893829 5163155
Land 675029 659985 649509 644656 642932 659005 675480 692367 709677 727419 745604 764244 783350 802934 823007
Construction account 125792 98663 255333 250858 337635 316262 294062 270756 282535 295921 311129 328404 348023 370301 395595
Other tangible assets 396488 391500 336206 421482 503568 516157 529061 542288 555845 569741 583984 598584 613549 628887 644610
Intangible assets 143911 133769 120114 75446 92334 93296 94305 95365 96478 97647 98874 100163 101516 102937 104428
Goodwill 64454 57562 52328 21000 19231 20193 21202 22262 23375 24544 25771 27060 28413 29834 31325
Other intangible assets 79457 76207 67786 54446 73103 73103 73103 73103 73103 73103 73103 73103 73103 73103 73103
Investment and other assets 632370 620047 610621 970035 1243753 1243753 1243753 1243753 1243753 1243753 1243753 1243753 1243753 1243753 1243753
Investment in securities 268755 381549 371259 717555 930293 930293 930293 930293 930293 930293 930293 930293 930293 930293 930293
Long-term loans receivable 11125 17147 5617 13052 13529 13529 13529 13529 13529 13529 13529 13529 13529 13529 13529
Deferred tax assets（fixed） 133666 69711 92378 83705 117437 117437 117437 117437 117437 117437 117437 117437 117437 117437 117437
Other investment and other assets 223696 155993 144605 158420 185047 185047 185047 185047 185047 185047 185047 185047 185047 185047 185047
Allowance for doubtful accounts（▲）（fixed） -4872 -4353 -3238 -2697 -2553 -2553 -2553 -2553 -2553 -2553 -2553 -2553 -2553 -2553 -2553
Total assets 10214820 10736693 11072053 12442337 14703403 15061810 15428977 15813372 16368446 17001744 17690990 18443798 19268660 20175087 21173765
Figure.16 Balance Sheet（Debt and net assets）
（Million Yen） 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E
Current liabilities 3856858 4380545 4145228 4253260 5187249 5452159 5452489 5416769 5527620 5686232 5866085 6070099 6301577 6564254 6862359
Notes and account payable 1001287 1181469 1377254 1168584 1511910 1535839 1569509 1608056 1677687 1755805 1844383 1944862 2058866 2188236 2335055
New borrowing 0 0 0 0 0 215141 145858 30530 0 0 0 0 0 0 0
Short-term lones payable 349427 593095 244582 519796 706576 706576 706576 706576 706576 706576 706576 706576 706576 706576 706576
Long-term loans payable in one year 695655 933976 822268 779856 910546 910546 910546 910546 910546 910546 910546 910546 910546 910546 910546
Commercial paper 174393 256601 38437 219453 151175 151175 151175 151175 151175 151175 151175 151175 151175 151175 151175
Bonds payable in one year 407130 87280 187198 181336 226590 226590 226590 226590 226590 226590 226590 226590 226590 226590 226590
Lease obligations（current） 64984 77598 38190 32673 32838 32838 32838 32838 32838 32838 32838 32838 32838 32838 32838
Accured expenses 523444 580350 660369 598890 693438 721094 754413 791376 825644 864088 907680 957129 1013234 1076901 1149155
Deferred tax liability（current） 114 116 136 116 316 316 316 316 316 316 316 316 316 316 316
Provision for product warranties 76816 85688 85535 80311 93151 93151 93151 93151 93151 93151 93151 93151 93151 93151 93151
Provision for loss on disaster 0 12128 0 0 0 0 0 0 0 0 0 0 0 0 0
Other current liabilities 563608 572244 691259 672245 860709 858893 861517 865615 903097 945148 992829 1046917 1108285 1177925 1256957
Fixed liabilities 3342857 3082365 3476828 4153047 4844626 4658300 4690070 4723428 4758454 4795232 4833848 4874396 4916970 4961674 5008612
Bonds payable 507142 640850 584962 671693 918783 918783 918783 918783 918783 918783 918783 918783 918783 918783 918783
Long-term loans payable 1791983 1422478 1877997 2352170 2682381 2682381 2682381 2682381 2682381 2682381 2682381 2682381 2682381 2682381 2682381
Lease Obligations（fixed） 86552 67135 34584 22795 23580 23580 23580 23580 23580 23580 23580 23580 23580 23580 23580
Deferred tax liability（fixed） 445299 463347 486699 555249 605140 635397 667167 700525 735551 772329 810945 851493 894067 938771 985709
Provision for product warranties 102516 98668 100431 89021 105884 105884 105884 105884 105884 105884 105884 105884 105884 105884 105884
Reserve for retirement allowance 175638 182155 159369 164672 0 0 0 0 0 0 0 0 0 0 0
Liabilities on retirement allowance 0 914 544 0 216583 0 0 0 0 0 0 0 0 0 0
Reserve for retirement benefits for officers 1303 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Other fixed liabilities 232424 206818 232242 297447 292275 292275 292275 292275 292275 292275 292275 292275 292275 292275 292275
Total liabilities 7199715 7462910 7622056 8406307 10031875 10110459 10142559 10140197 10286074 10481464 10699933 10944495 11218547 11525927 11870971
Net asset 3015105 3273783 3449997 4036030 4671528 4951351 5286418 5673175 6082372 6520279 6991057 7499303 8050112 8649160 9302794
Fund 605814 605814 605814 605814 605814 605814 605814 605814 605814 605814 605814 605814 605814 605814 605814
Capital surplus 804470 804470 804470 804470 804485 804485 804485 804485 804485 804485 804485 804485 804485 804485 804485
Earned surplus 2456523 2733253 3009090 3252876 3526646 3526646 3526646 3526646 3526646 3526646 3526646 3526646 3526646 3526646 3526646
Own shares（▲） -267841 -162024 -149542 -149549 -149315 -149315 -149315 -149315 -149315 -149315 -149315 -149315 -149315 -149315 -149315
Shareholder's equity 3598966 3981513 4269832 4513611 4787630 5067453 5402520 5789277 6198474 6636381 7107159 7615405 8166214 8765262 9418896
Total other inclusive profit -891615 -1040098 -1123133 -781763 -448976 -448976 -448976 -448976 -448976 -448976 -448976 -448976 -448976 -448976 -448976
Share warrant 2387 2415 2415 2415 2401 2401 2401 2401 2401 2401 2401 2401 2401 2401 2401
Minority interests 305367 329953 300883 301767 330473 330473 330473 330473 330473 330473 330473 330473 330473 330473 330473
Debt and net assets 10214820 10736693 11072053 12442337 14703403 15039119 15366078 15844778 16417250 17013584 17637149 18289958 18974084 19691682 20445004
Figure.17 Profit and Loss Statement
（Million Yen） 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E
Sales amount 7517277 8773093 9409026 8737320 10482520 10827652 11220287 11666777 12174328 12751117 13406428 14150793 14996167 15956116 17046038
Cost of sales 6146219 7155100 7772832 7289987 8636063 8890410 9208829 9565033 9979211 10443871 10970752 11568417 12246537 13016055 13889362
Gross margin 1371058 1617993 1636194 1447333 1846457 1937242 2011458 2101744 2195116 2307247 2435675 2582375 2749630 2940061 3156676
Selling, general and admistrative expense 1059449 1080526 1090355 1008510 1348092 1377665 1412268 1452495 1515698 1587514 1669097 1761756 1866978 1986450 2122085
Operating income 311609 537467 545839 438823 498365 559577 599190 649250 679418 719733 766578 820619 882651 953612 1034591
Non-operating income 29126 86603 69152 124022 111146 121398 127677 134411 141943 150381 159465 169181 179575 190697 202602
Interest incomes and dividends received 15768 15596 22950 15948 23077 27737 28028 28347 29011 30093 31300 32579 33937 35383 36925
Other non-operating income 13358 71007 46202 108074 88069 93661 99650 106063 112932 120288 128166 136602 145638 155314 165677
Non-operating expense 132988 86256 79901 58424 82322 91912 92397 91783 91299 91197 91197 91197 91197 91197 91197
Interest expense 28995 28357 32892 26312 28677 38267 38752 38138 37654 37552 37552 37552 37552 37552 37552
Other non-operating expense 103993 57899 47009 32112 53645 53645 53645 53645 53645 53645 53645 53645 53645 53645 53645
Ordinary profit 207747 537814 535090 504421 527189 589063 634471 691877 730062 778916 834846 898603 971029 1053111 1145995
Extraordinary profit 20552 27989 55991 15269 27128 27128 27128 27128 27128 27128 27128 27128 27128 27128 27128
Other extraordinary loss 86679 85662 61752 32357 24939 24939 24939 24939 24939 24939 24939 24939 24939 24939 24939
Net income before income tax 141620 480141 529329 487333 529378 591252 636660 694066 732251 781105 837035 900792 973218 1055300 1148184
Corporation tax, residence tax, and enterprise tax 112825 90223 115185 86065 131990
Income taxes-deferred -21285 41904 36321 38229 -16939
Minority interests 7690 28793 36390 21922 25293 25293 25293 25293 25293 25293 25293 25293 25293 25293 25293
Net income 42390 319221 341433 341117 389034 374259 423263 462856 489712 524072 563409 608251 659189 716919 782246
Figure.18 Cash Flow Statement
（Million Yen） 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E
Net income 42390 319221 341433 341117 389034 374259 423263 462856 489712 524072 563409 608251 659189 716919 782246
Depreciation expense 661014 632448 580344 567450 677188 690067 732439 773497 805224 835249 868317 905050 946110 992215 1044150
Amortization of goodwill 6221 5786 5251 2104 1814 1932 2057 2190 2300 2415 2535 2662 2795 2935 3082
Notes and account receivable -212076 -97796 -81058 236896 -202842 -42840 -47632 -53153 -40440 -45957 -52213 -59309 -67357 -76486 -86842
Selling financial credit 64399 -100983 -463506 -951583 -871633 0 0 0 0 0 0 0 0 0 0
Inventories -42208 -179955 -36733 -26293 -106592 -43035 -48626 -54990 -56490 -64196 -72935 -82847 -94089 -106842 -121307
Deferred tax assets（current） -2577 -54696 17249 22407 33738 0 0 0 0 0 0 0 0 0 0
Other current asset -7974 -18714 12201 -4797 -138399 -14265 -16694 -19410 -30475 -34632 -39347 -44694 -50759 -57639 -65442
Allowance for doubtful accounts（▲）（current） -7223 -9498 -26325 -11966 15292 0 0 0 0 0 0 0 0 0 0
Deferred tax assets（fixed） -20346 63955 -22667 8673 -33732 0 0 0 0 0 0 0 0 0 0
Allowance for doubtful accounts（▲）（fixed） -1128 -519 -1115 -541 -144 0 0 0 0 0 0 0 0 0 0
Notes and account payable 379383 180182 195785 -208670 343326 23929 33670 38547 69631 78118 88578 100478 114004 129370 146819
Lease obligations（current） -6395 12614 -39408 -5517 165 0 0 0 0 0 0 0 0 0 0
Accured expenses 71379 56906 80019 -61479 94548 27656 33319 36963 34268 38444 43592 49449 56105 63667 72254
Provision for product warranties -3065 8872 -153 -5224 12840 0 0 0 0 0 0 0 0 0 0
Provision for loss on disaster 0 12128 -12128 0 0 0 0 0 0 0 0 0 0 0 0
Other current liabilities 91827 8636 119015 -19014 188464 -1816 2624 4097 37482 42051 47682 54087 61368 69640 79032
Lease Obligations（fixed） -18987 -19417 -32551 -11789 785 0 0 0 0 0 0 0 0 0 0
Provision for product warranties 374 -3848 1763 -11410 16863 0 0 0 0 0 0 0 0 0 0
Reserve for retirement allowance -9374 6517 -22786 5303 -164672 0 0 0 0 0 0 0 0 0 0
Liabilities on retirement allowance 0 914 -370 -544 216583 -216583 0 0 0 0 0 0 0 0 0
Reserve for retirement benefits for officers -668 -1303 0 0 0 0 0 0 0 0 0 0 0 0 0
Other fixed liabilities 44759 -25606 25424 65205 -5172 0 0 0 0 0 0 0 0 0 0
Operating CF 1029725 795844 639684 -69672 467454 799304 1114421 1190599 1311212 1375562 1449618 1533127 1627367 1733779 1853991
Depreciable assets 157816 173926 -3304 -375144 -408561 -181694 -170985 -166100 -139150 -152819 -169396 -189057 -212047 -238677 -269326
Land 13675 15044 10476 4853 1724 -16073 -16475 -16887 -17309 -17742 -18185 -18640 -19106 -19584 -20073
Construction account 21334 27129 -156670 4475 -86777 21373 22200 23306 -11779 -13386 -15208 -17275 -19619 -22278 -25294
Other tangible assets 59093 4988 55294 -85276 -82086 -12589 -12904 -13227 -13557 -13896 -14244 -14600 -14965 -15339 -15722
Goodwill 11736 6892 5234 31328 1769 -962 -1010 -1060 -1113 -1169 -1227 -1289 -1353 -1421 -1492
Other intangible assets 11571 3250 8421 13340 -18657 0 0 0 0 0 0 0 0 0 0
Other investment and other assets 28255 67703 11388 -13815 -26627 0 0 0 0 0 0 0 0 0 0
Depreciation expense -661014 -632448 -580344 -567450 -677188 -690067 -732439 -773497 -805224 -835249 -868317 -905050 -946110 -992215 -1044150
Amortization of goodwill -6221 -5786 -5251 -2104 -1814 -1932 -2057 -2190 -2300 -2415 -2535 -2662 -2795 -2935 -3082
Investing CF -363755 -339302 -654756 -989793 -1298217 -881944 -913671 -949655 -990433 -1036675 -1089112 -1148573 -1215996 -1292448 -1379139
FCF 665970 456542 -15072 -1059465 -830763 -82640 200750 240944 320779 338887 360506 384554 411371 441331 474852
Securities 76327 -107371 80536 -30176 94182 0 0 0 0 0 0 0 0 0 0
Investment in securities 31822 -112794 10290 -346296 -212738 0 0 0 0 0 0 0 0 0 0
Long-term loans receivable 11920 -6022 11530 -7435 -477 0 0 0 0 0 0 0 0 0 0
Short-term lones payable -311529 243668 -348513 275214 186780 0 0 0 0 0 0 0 0 0 0
Long-term loans payable in one year -74839 238321 -111708 -42412 130690 0 0 0 0 0 0 0 0 0 0
Commercial paper -464759 82208 -218164 181016 -68278 0 0 0 0 0 0 0 0 0 0
Bonds payable in one year 186246 -319850 99918 -5862 45254 0 0 0 0 0 0 0 0 0 0
Deferred tax liability（current） -84 2 20 -20 200 0 0 0 0 0 0 0 0 0 0
Bonds payable -88167 133708 -55888 86731 247090 0 0 0 0 0 0 0 0 0 0
Long-term loans payable 91968 -369505 455519 474173 330211 0 0 0 0 0 0 0 0 0 0
Deferred tax assets（fixed） -1841 18048 23352 68550 49891 30257 31770 33358 35026 36778 38616 40547 42575 44703 46939
Share warrant 298 28 0 0 -14 0 0 0 0 0 0 0 0 0 0
Minority interests 7036 24586 -29070 884 28706 0 0 0 0 0 0 0 0 0 0
Dividend payment 0 -20922 -62748 -94306 -115265 -94436 -88195 -76100 -80515 -86164 -92632 -100005 -108379 -117871 -128612
Other change of sharholder's equity 39328 -64235 -73401 338338 333037 0 0 0 0 0 0 0 0 0 0
Financial CF -496274 -260130 -218327 898399 1049269 -64179 -56426 -42741 -45489 -49387 -54016 -59457 -65805 -73168 -81673
Cash and deposits -169696 -196412 233399 161066 -218506 -68322 -75042 -82875 -45640 -51866 -58927 -66935 -76018 -86321 -98008
Figure.19 DCF
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023Cost of sales 8890410 9208829 9565033 9979211 10443871 10970752 11568417 12246537 13016055 13889362
Selling, general and administrative expense 1377665 1412268 1452495 1515698 1587514 1669097 1761756 1866978 1986450 2122085EBITA 559577 599190 649250 679418 719733 766578 820619 882651 953612 1034591
Corporarion tax rate 32.4% 29.5% 29.7% 29.7% 29.7% 29.7% 29.7% 29.7% 29.7% 29.7%NOPLAT 378147 422157 456629 477847 506201 539148 577157 620785 670692 727646
Depreciation expense 690067 732439 773497 805224 835249 868317 905050 946110 992215 1044150Gross CF 1068214 1154595 1230127 1283071 1341449 1407465 1482207 1566895 1662907 1771796
Increment of operating capital 61946 62587 69596 27299 32036 36570 41678 47442 53958 61331Capital investment 850388 881225 916291 956154 1001454 1052921 1111382 1177777 1253170 1338770Total investment 912333 943811 985887 983453 1033489 1089491 1153060 1225219 1307127 1400101
FCF 155881 210784 244239 299619 307960 317974 329147 341676 355780 371695
Discount rate 1.04 1.09 1.14 1.19 1.24 1.30 1.36 1.42 1.48 1.55Present value 149198 193100 214157 251453 247374 244469 242210 240652 239844 239832
Total PV 2262288
Parmanent growth rate 0Discout rate 1.62 rF 0.005
Contentious value 6598593 Risk premium 0.060β 1.065
Enterprise value 8860881 rD 0.011rE 0.066
Asset for non-business 1243753 Corporation tax rate 0.32Firm Value 10104634 Interest-bearing debt 2913670
Market capitalization 4461946Iinterest-bearing debt 4307740 After-Tax WACC 0.045
Minority interests 330473 Discount rate 1.045Shareholder's equity value 5466421 Permanent growth rate 1%
Outstanding shares 4520715112Target price 1209
