We decided to buy Nissan Motor Co Ltd for the following reasons.
Strong financial ratios
As usual, we start with the financial ratios. Looking into the Japanese automobile industry, Nissan Motor Co Ltd shows the lowest P/E together with low price to book ratio. At the same time, one of the highest net profit margin together with the best current ratio, meaning the healthiest debt level from the industry. We also feel confident about the dividend yield at the 4.55%.
Coming back from a rough media pressure
Over the last couple of months, Nissan Motor Co Ltd has been going through a lot after a compliance scandal. There has been revelations, that Nissan failed to follow proper internal inspection procedures for its domestic car market. As a result 1.2m cars have been recalled and the Nissan sales in the domestic market are plummeting. This might sound as a red flag, but let’s keep in mind that the domestic market represents only 5-10% of the global sales of Nissan globally.
The sales statistics of Nissan Motor Co Ltd can be found on their very transparent investor relation site.
Solid worldwide unit sales performance
Nissan Motor Co Ltd is operating beyond Japan. Very solid sales results happening in other geographies :
- China +6.7%
- Europe +3.6%
- US sales are down 0.4% but it is worth mentioning that global car sales decreased 2.3%
- Rest of the world +2.3%
Important to mention here that even if the # of units increase roughly 3% in total, sales value only increases by approx 1%. Why does not help beyond the recall.
Nissan Motor Co Ltd Increasing dividend to reward loyalty of shareholders
Despite reducing the operating profit by 6% – from 685bn Yen to 645bn Yen, Nissan Motor Co Ltd still expects to meet topline target. For the same period, the dividend will be increased from about 10% from 24 to 26.5 Yen per share. Good news especially after the PR shitstorm faced in local market.
All in all, Nissan Motor Co Ltd, as at 5 months low at the moment and could be worth a try.
Please only consider this investment if you can afford to lose it.
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