This is our first report on global automobile behemoth, Honda Motors. The company delivered a mixed set of results for the past quarter, managing to surpass revenue expectations of Wall Street but missing out on earnings. The Shanghai lockdown and semiconductor supply shortage resulted in a drop in unit sales and automobile production of Honda in the quarter, mainly in North America and China. Operating profit was down in comparison to the previous quarter. However, despite soaring raw material costs and a drop in automobile unit sales, the sales of motorcycle units were up which led to the revenue beat. The outlook remains uncertain because of inflation and the semiconductor supply shortage. The company’s increased push towards EVs is evident from the fact that its Chinese unit would be establishing a joint venture with Guangzhou Automobile Group Co and Dongfeng Motor Group to procure batteries for fully electric vehicles. They also collaborated with LG Energy solution making Ohio as their home for the joint venture EV battery plant. We initiate coverage on the stock of Honda with a ‘Buy’ rating.
Our Report Structure:
⦁ Company Overview
⦁ Investment Thesis
⦁ Key Drivers
⦁ Historical Quarterly Statement Analysis – Income Statement & Cash Flows
⦁ Historical Quarterly Balance Sheet Analysis
⦁ Historical Annual Financial Statement Analysis
⦁ Analysis Of Key Financial Ratios
⦁ Financial Forecasts For 3 Years
⦁ Forecasting The Capital Structure & Net Debt
⦁ Discounted Cash Flow Valuation
⦁ Trading Multiples
⦁ Key Risks
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