The following is a comment written by individual investor "G有限亭玉介" of Fisco Social Reporter (blog: Profitable Stock Information "Cat Husband's Stocks are Limitlessly High"). At Fisco, efforts are made to actively disseminate diverse information to investors by collaborating with individuals who proactively share information.

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※Written on December 29, 2024, at 3 PM.

Since Carlos Ghosn, the charismatic CEO, made his escape from Japan in a ridiculous disguise, concerns regarding Nissan's management have only deepened. While thinking about what will happen to Nissan from here on out, news of a management integration came pouring in.

Once again, my name is G有限亭玉介, and I am writing the stock and cat blog "Profitable Stock Information 'Cat Husband's Stocks are Limitlessly High'."

The news of the management integration between Nissan <7201>, Honda <7267>, and Mitsubishi Automobiles <7211> will surely serve as a turning point for the future of Japan's automobile industry. However, since Nissan's management situation is tough, the reactions from Shareholders and Honda employees don't seem very positive. They plan to come to a conclusion on the management integration by June 2025, so for now, the trends will be closely monitored.

In 2023, Honda's passengers carried was approximately 3.98 million, ranking 7th in the world, while Nissan's was around 3.37 million, placing 8th. Combined, they total about 7.35 million, which would make them rank 3rd in the world. The first place is, of course, Toyota <7203> with 11 million. Recently, there was an announcement aiming for a 20% ROE, which has gathered speculation from both domestic and international investors, and is drawing attention. The 2nd place is Volkswagen with about 9.23 million, and the 3rd is Hyundai Motor with approximately 7.3 million. If the management integration between Nissan and Honda is realized, they would slightly surpass Hyundai Motor.

However, Nissan is in the midst of restructuring and recovering its management, and honestly, I can't think that Honda has the management margin to cover Nissan. Regarding Mitsubishi Automobiles, which is under Nissan, the latest ordinary income significantly underperformed the business estimates, resulting in reduced profits. Indeed, Japan's proud automobile industry is facing a challenging phase...

Now, various companies including components manufacturers are being scrutinized due to the favorable news regarding the merger of Nissan and Honda. While there are some stocks that are not performing well due to concerns about earnings instability, several have been selected as candidates to watch over the medium to long term.

Following the report of the merger, F-Tech <7212>, which has shown signs of movement from its bottom price, also has speculation surrounding its low P/b ratio. As Honda Motor Co. is the largest shareholder, the company will be affected if the merger is realized.

Similarly, G-Tech <5970>, which also has Honda Motor Co. as its largest shareholder, has started to rise from its bottom price range. The company, which specializes in pressed components, exhibits a sense of undervaluation in terms of P/E ratio and PB, and seems to maintain a high dividend despite soft performance. If the merger is realized, components manufacturers will likely benefit as well.

Unipress <5949>, which handles body skeleton components, is also active in share buybacks. The company offers a high yield, but whether it can maintain this dividend level going forward is uncertain. Monitoring whether it can surpass the 75-day moving average and form an upward trend.

Kawasaki Heavy Industries <7256>, which had been in a long-term downtrend, has also shown movement from its bottom price. The company supplies automotive interior components primarily to Nissan, but will the chart improve with the realization of the merger? Smaller stocks show noticeable agility.

Nissan Shatai <7222>, a vehicle assembly company affiliated with Nissan, has also been targeted for investment. Even before the merger news, the chart was steadily holding its ground, but recently production cost increases seem to be pressuring profits. Looking at this, many manufacturers seem to share a fate with Nissan.

Finally, Musashi Seimitsu Industry <7220>, which handles shafts and gears affiliated with Honda. With Honda accounting for 50% of its business, the company has been steadily progressing since the sudden movement after the earnings report on November 7 of last year. It remains to be seen whether the trend can be maintained until the outcome of the merger is clear.

Well, the story has become a bit long, but on my blog, I introduce "individual stocks and theme stocks that are currently strong". Please take a look if you have time. We look forward to welcoming you with our beloved cat, "Al".

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Author name: Yūgentō Gyokusuke

Blog name: The Cat Husband's Stocks are Limitless