Shamil Musaev
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HIDDEN NISSAN

As it was previously mentioned, our blog is about automotive industry. So we decided to continue our Japanese research and we have taken note of Nissan Motor Corporation. Everybody knows, today automotive industry is in tough times which is related to the various facts from Chinese demand decline to the current oil price, but Nissan reported positive trend in its financial highlights.

First of all, Nissan has a partnership with Daimler, Mitsubishi Motors, Dong Feng , AVTOVAZ and Renault. Moreover, Renault holds a 43.4% voting shares in Nissan and they have a Franco-Japanese strategic alliance. Also sixteen-year-old alliance is under pressure linked to the French government actions and Japanese wants to merger. These news made uncertainty in the forecasts despite the fact of 2.62 million vehicles sold globally during the period, a 1.3% rise year-on-year.

Table 1. Financial Highlights 2010 - 2014

All figures show a sustainable growth. For instance, the net sales increased from 8 773 093 million Yen in 2010 to 11 375 207 million Yen in 2014 which is 9% or 892 687 million Yen higher than in 2013. Furthermore, the net income rate of growth estimated 134% or 116 457 million Yen commands confidence. Also the total assets grew up by 16% or 2 342 256 million Yen more in comparison to 2013. Finally the amount of workforce increased by 6 463 employees more, than in 2013. All these facts give a reason to respect current management program.

Table 2. Profitability Ratios 2013 – 2015 (I Half)

2015 (I half) 2014 2013
ROS 5.9% 4% 3.71%
ROA 2.04% 2.68% 2.64%
ROE 10% 10% 9.5%

According to the table 2, Nissan makes an annual profit for its shareholders, but it is important to mention neither growth nor decline. Let’s move to the Price to Earnings ratio (P/E). In 2014 P/E estimated 11.21, which is 1.3 more than in previous year. On the one hand if P/E is high then the share of this company is less lucrative, but on the other hand high P/E presents a financial stability of the company and future prosperity.

Chart 1. Daily Nissan Motors Chart (7201, D)

The chart below shows that after summer 2015 downtrend of Nissan stocks there was a sustainable growth from September 2015 till now. A Relative Vigor Index (RSI) shows that its bottom line had been broken by the stock price in August 2015. It means the uncertainty of the market but this signal is not precise. Therefore we have proved it by two moving average (MA) which proved the uptrend. On this graph MA follows the RSI when a short-term MA had broken from the bottom to top through the long-term MA. Till the end of October there was a RSI growth which means a downward momentum, but support level hasn’t been broken. In the beginning of November doji pattern was formed and coupled with sustainable growth it means a prospective trend reversal. That is why our team doesn’t expect a continuing growth without innovative products. Moreover, there are several macroeconomic reasons which underline future price about 18 $ per share. According to the high volatility and macroeconomic data Nissan shares has to be interesting for traders, not for investors.