Isuzu Motors "Upgrading to Buy: moving toward a bottoming out in earnings" (Buy)

Research evidence excerpt

Isuzu Motors "Upgrading to Buy: moving toward a bottoming out in earnings" (Buy)

ent appears favourable for Isuzu’s price hikes (Fig. 8). We forecast a return

03/28E 269.4 303.8 13 295.0

to growth in shipment volume in FY3/28, with passing of Middle East-related impacts

03/29E 299.6 348.3 16 326.6

contributing to CV shipment volume rising 5.0% yoy and pick-up shipment volume up

18.0% yoy (Fig. 3-4). For FY3/28, we forecast OP of more than ¥300.0bn, marking a Kohei Takahashi

new record high. From FY3/28, we also reflect improved profitability in N.America and Analyst

Japan due to price hikes. We lift our FY3/28 EPS estimate by 13% and FY3/29 by 16%. kohei.takahashi@ubs.com

+81-3-5208 6172

A leader in the Global South Mao Eguchi

Many commercial users prioritise service and maintenance systems as well as durability Associate Analyst

mao.eguchi@ubs.com

that enables the maximisation of their truck operating hours. The impact from

+81-3-5208 6242

competition with Chinese companies is less than it is with passenger vehicles. In addition

to Southeast Asia, where Isuzu holds a high market share, Africa and Latin America,

where overall market growth is expected to be robust, appear likely to drive growth,

with sales volume CAGR estimated at over 5% from FY3/28. In addition, in our upside

scenario, an expansion in potential demand in the Middle East due to rising resource

prices and pent-up replacement demand for Thai pickups equivalent to 2.0-3.0X FY3/26

annual sales could also materialise in FY3/28.

Valuation: Price target of ¥2,700 (previously ¥2,200)

Our PT is based on a FY3/28E PER of 9X. On the bottoming out in profit, we assume a

level between our previous 8X (midpoint for FY3/22-24, when Thailand pickup sales

continued to decline) and the 10-yr historical avg of 10X.