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Toyota Motor increases
Friday August 23, 2019 15:00 JST

Toyota Motor Corporation (TO:7203), the largest Transportation equipment company by market cap in Japan, has increased JPY10.0 (0.1%) from its previous trading session to close at JPY6,916.0. Compared with the Nikkei 225 Index which rose 82.9 points (0.4%) in the day, the relative price change was -0.3%. The volume was 0.6 times the average daily trading volume of 5.5 million shares. There were 3,400,000 shares worth JPY23.5 billion (US$220.6 million) traded today.

BEARISH TURNING POINT

Williams % R

The stock is overbought according to the Williams % R indicator of -9.2, suggesting the price is close to its 14-day high. The Williams % R was previously -26.5.

Stock Summary

CurrencyJapanese Yen (JPY) 1 USD = 106.58 JPY
Today's close (JPY)6916.0
52-Week Range (JPY)5,937.7-7,244.0
SectorTransportation Equipment sector
Shares Outstanding3,260,000,000
Market CapJPY22,546.2 billion (US$211.6 billion)

Highlights in today's Report:

SECTION 1 TODAY'S BULLISH SIGNALS

SECTION 2 TODAY'S BEARISH SIGNALS

SECTION 3 RELATED NEWS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF JPY6,916.0):

SECTION 4 THE PAST WEEK

SECTION 5 ONGOING BULLISH PARAMETERS

SECTION 6 ONGOING BEARISH PARAMETERS

SECTION 7 SUMMARY FINANCIALS

SECTION 8 CORPORATE PROFILE

SECTION 1 TOYOTA MOTOR BULLISH SIGNALS

1.1 Undervaluation [compared with sector average]:

Price/Earnings

+ Price/Earnings of 10.6. The P/E of 10.6 plus annual inflation in the Japan of 0.7% adds up to 11.3, well within the value benchmark Rule of 19.

Dividend Yield

+ The relative yield of Toyota Motor, defined by its yield of 3.2%, divided by average yield of dividend yielding stocks in the Nikkei 225 Index of 3.2% is 100.6%. This suggests Toyota Motor stock is undervalued in dividend yield terms.

Price to Book

+ The P/E of 10.6 multiplied by the P/NTA of 1.1 is 11.7. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.

MCap/Total Assets

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.4. Compared with the rest of the market the stock is undervalued.

Brand Value/Enterprise Value

+ Brandirectory have estimated Toyota Motor's brand value at JPY2,768.7 billion (US$26 billion). The Brand Value represents 6.4% of the estimated Enterprise Value of JPY43,415.3 billion (US$407.4 billion). Enterprise Value is defined as MCap of JPY22,546.2 billion plus net debt of JPY20,869.2 billion.

1.2 Undervaluation Indicator and rank of Toyota Motor in the Japanese market:

DescriptionValueRank In Market
* EV/EBITDA19.0In Top Quartile

* Enterprise value of JPY43,415.3 billion is divided by Earnings before interest tax depreciation and amortization of JPY2,285.5 billion.

1.3 Uptrend:

Price/Moving Average Price:

+ The Price/MAP of 1.03 for 7203 is higher than the Price/MAP for the Nikkei 225 Index of 0.96.

+ The price to 50-day EMAP ratio is 1.0, a bullish indicator. In the past 50 days this ratio has exceeded 1.0, 17 times suggesting further upside. The 50-day EMAP has increased to JPY6,804.30. An increase is another bullish indicator.

+ The price to 200-day MAP ratio is 1.03, a bullish indicator. In the past 200 days this ratio has exceeded 1.03 18 times suggesting further upside. The stock is trading above both its MAPs and the 50-day MAP of JPY6,791.35 is higher than the 200-day MAP of JPY6,699.75, a bullish indicator. The 200-day MAP has increased to JPY6,699.75. An increase is another bullish indicator.

Past Week:

+ Toyota Motor Corporation is placed 1002/3506 in BuySellSignals' ranking of Japan performers in the past week, a percentile ranking of 72.

+ In the past week, volume was 0.6 times average and the shares were up 1.9%. Friday's close price is at a 0.2% premium to its 5-day Volume Weighted Average Price (VWAP) of JPY6,902.73.

Relative Strength (6 months):

+ In the Japan market of 3,567 stocks and 23 units traded today, the stock has a 6-month relative strength of 73 indicating it has outperformed 73% of the market.

1.4 High Price Performance Indicators and rank of Toyota Motor in the Japan market:

DescriptionValueRank In Market
MCapJPY22,546.2 billionIn Top 1%
Today's Trading TurnoverJPY23.5 billion (US$220.6 million)In Top 1%
Volatility %0.9In Top Quartile
Price/MAP501.02In Top Quartile
Price/MAP2001.03In Top Quartile

SECTION 2 TOYOTA MOTOR BEARISH SIGNALS

2.1 Overvaluation [compared with sector average]:

Price to Sales

+ Price/Sales of 0.8 [0.5].

Price to Book

+ Price to Book of 1.1 [0.9].

Price to EBITDA

+ Price to EBITDA of 9.9 [7.6].

2.2 Downtrend:

Past Month:

+ The price dropped 2.6% in the past month.

Overbought/Bearish Signals:

+ The stock is overbought according to the Williams % R indicator of -9.2, suggesting the price is close to its 14-day high of JPY6,946.0.

SECTION 3 TOYOTA MOTOR RELATED NEWS

American Depository Receipts

+ Toyota Motor ADR decreases

Toyota Motor Corporation (N:TM), the International Depository Receipt (IDR) market's largest Auto manufacturers company by market cap, has decreased 23.0c (0.2%) from its previous trading session to close at $US129.65. Compared with the Bank of New York Mellon Composite ADR Index which fell 0.8 points (0.6%) in the day, the relative price increase was 0.4%. The volume was 0.3 times the average daily trading volume of 204,351 ADRs. There were 53,100 ADRs worth $US6.9 million traded today.

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF JPY6,916.0):

SECTION 4 THE PAST WEEK

4.1 Snapshot: Toyota Motor stock was up JPY126.0 or 1.9% in the past week. Volume in the week was 0.6 times average trading of 27.5 million shares. It underperformed the Nikkei 225 index in 3 out of 5 days.

DayToyota MotorClose price [JPY]Price change %Relative change %Comment
ThursdayDecreases6,906.0-0.04-0.1Price fall on slipping relative strength
WednesdayConsolidates after 2 days of consecutive rises6,909.000.3Price/MAP50 above 1 and rising
TuesdayRises for a second consecutive day, a two-day rise of 1.8%6,909.00.5-0.03Price/MAP50 above 1 and rising
MondayAdds JPY270.6 billion (US$2.5 billion) in MCap, top heavyweight rise in Nikkei 225 Index6,873.01.20.5Top Rise
FridayFalls for a second consecutive day, a two-day fall of 0.9%6,790.0-0.1-0.1Steepest Fall

4.2 Volatility:

+ Toyota Motor is at a discount of 4.5% to its 12-month high of JPY7,244.0 on July 25. It is also at a premium of 16.5% to the 12-month low of JPY5,937.69 on December 26, 2018.

SECTION 5 ONGOING BULLISH PARAMETERS

5.1 Performance:

+ Return on Equity 9.7% [8.0%].

+ Return on Assets 3.8% [3.2%].

+ Net profit margin has averaged 7.8% in the last 3 years. This is better than the sector average of 5.4% and suggests a high margin of safety.

+ As per the Du Pont analysis, Return on Equity [ROE] of 9.7% is better than sector average of 8.0%. ROE is computed as net profit margin of 7.1% times asset turnover [sales/assets] of 0.58 times leverage factor [total assets/shareholders' equity] of 2.5.

5.2 Growth:

Quarterly Trend in Revenue, Net Profit and Net Profit Margin:

+ Net Profit margin is positive and has seen consecutive rises in recent quarters. [All figures in %]

Qtr-endedRevenue GrowthNet Profit GrowthNet Profit Margin
Mar 19 [Q4]-0.71544.9
Dec 18 [Q3]6.7-69.12.2

5.3 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the real rate of return has averaged 11.1%. The Moving Annual Return has been positive in 4 of the last 5 years. An investment a year ago in 7203 would have produced a return of 8.3%.

7203Close (JPY)Dividends (JPY)Capital Gain / (Loss) %% YieldAnnual Return %
Aug 236,91622053.38.3
1 Yr ago6,587.4422014.53.818.3
2 Yrs ago5,755.172104.23.88.0
3 Yrs ago5,524.93210(16.6)3.2(13.4)
4 Yrs ago6,625.7520030.43.934.4

Close 5 years ago JPY5,079.52

5.4 Increased VWAP

Past five years, 12 months ended Aug 23 (JPY)

YearHigh PriceVWAPLow Price
20197244.06646.165937.69
20187443.566804.555688.59
20176645.325786.75058.36
20166994.955697.214453.46
20157632.956546.294936.9

In the past five years Volume Weighted Average Price (VWAP) has increased by 1.5% to JPY6,646.16. Based on a dynamic start date of five years ago, there have been declines in VWAP in 2 out of 5 years.

5.5 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 42.6% (or a turnover period of 2 years 4 months). The average length of ownership of the stock is 2.4 times the average holding period of 11 months for stocks in the Nikkei 225 Index suggests a larger number of core investors, making a long-term investment safer.

SECTION 6 ONGOING BEARISH PARAMETERS

6.1 Growth:

Annual Trend in Revenue, EPS and EBITDA:

5-years average annualized earnings growth rate of 2.5%

+ Profit growth and EBITDA growth have shown signs of deterioration in recent years. [Year ended, all figures in %]

YearRevenue GrowthEPS GrowthEBITDA Growth
Mar 192.9-22.7-12.8
Mar 186.239.117.9

6.2 High Debt Indicators:

+ The debt to equity ratio of 98.0% is above a safe benchmark figure of 70%. Moreover, it has deteriorated from 97.1% a year ago.

+ Total Liabilities/EBITDA of 13.7 compares unfavourably with the Joseph Piotroski benchmark of 5.

DescriptionValueRank In Market
Debt to Equity1.0In Bottom Quartile

6.3 Past 4 Quarters Sequential EPS growth averaged 3.5%:

Quarterly ReportEPS (JPY)Growth %
Q4/2019156.0-32.8
Q3/2019232.033.3
Q2/2019174.0-18.7
Q1/2019214.032.1

The most recent quarter (Q4/2019) showed a decline of 32.8% in sequential growth of Quarterly EPS. There have been two rises and two declines in the past 4 quarters. Average quarterly growth in the past 4 quarters was muted at 3.5%.

6.4 Past 5 years Annual EPS growth:

Annual ReportEPS (JPY)Growth %
2019650.55-22.7
2018842.039.1
2017605.47-17.7
2016735.366.9
2015687.6619.6

Average Annual Compounded rate of growth in EPS for the 5 years was muted at 2.5%. There have been three rises and two declines in the past 5 years.

6.5 Declining ADVT past five years

Avg. Daily Volume Traded 12 months ended Aug 23, million shares

YearADVT
20195.5
20186.2
20177.6
201611.2
20159.0

In the past five years, Average Daily Volume of Trading (ADVT) has decreased 38.6% to 5.5 million shares.

6.6 Declining Average Daily Turnover

Past five years, 12 months ended Aug 23 (JPY billion)

YearAverage Daily Turnover
201935.6
201842.0
201743.4
201662.3
201557.0

In the past five years, average daily share turnover has decreased 37.5% to JPY35.6 billion (US$334.3 million). This suggests decreased liquidity.

SECTION 7 TOYOTA MOTOR SUMMARY FINANCIALS

7.1 Dividend History

Trailing 12 months dividend for the 12 months ended August 23 has improved from JPY200.0 in 2015 to JPY220.0 in 2019.

7.2 Financials Summary

Year endedMar 2019Mar 2018Mar 2017
Sales (USD B)284276259.9
Pretax (USD B)21.524.620.6
Net (USD B)17.723.417.2
EPS (JPY)650.55842605.47

+ Net profit was down 24.5% from US$23.4 billion in 2018 to US$17.7 billion in 2019.

+ Earnings Per Share (EPS) was down 22.7% from JPY842.0 to JPY650.55.

7.3 Annual Report: Key Parameters

FY2019 Annual Report: Toyota Motor Net Profit down 24.5%

Toyota Motor (TO:7203) reported net profit for the year-ended 31 March 2019 of JPY1,883b ($US17.0b), down 24.5% from JPY2,494b ($US23.5b) in the previous year.

Major changes compared with previous year:

Favourable Changes:

- Total revenue up 2.9% from JPY29,379.5b ($US276.6b) to JPY30,225.7b ($US272.6b)

- Sales and marketing expenses to Sales down from 11.3% to 10.6%

- Working capital to total assets up from 0.7% to 1.3%

- Retained earnings to total assets up from 39.6% to 40.6%

- Other non-current assets to Total Assets up from 27.6% to 28.7%

- Current Debtors to Total Assets up from 18% to 18.5%

Unfavourable Changes:

- Net profit slumps 24.5% from JPY2,494.0b ($US23.5b) to JPY1,882.9b ($US17.0b)

- EPS slumps 22.7% from JPY842.0 ($US7.93) to JPY650.55 ($US5.87)

- EBIT Margin down from 9.6% to 8.1%

- EBIT to total assets down from 5.2% to 4.4%

- Profit before tax to Sales down from 9.6% to 8.1%

- Long-term investments to Total Assets down from 15.9% to 14.4%

- Total Liabilities to EBITDA of 13.7 compares unfavourably with the Joseph Piotroski benchmark of <5. This ratio has deteriorated by 18.4% from the previous year's ratio of 11.6.

- Total Liabilities to Operating Cash Flow of 8.3 compares unfavourably with the Joseph Piotroski benchmark of <4. This ratio has deteriorated by 15.7% from the previous year's ratio of 7.2.

Note:

- Total revenue to total assets steady at 0.6

- Cost of Goods Sold to Sales up from 87.1% to 88.2%

- Tax expenses to Sales up from 1.8% to 2.3%

- Debt to Equity steady at 1.0

- Current ratio steady at 1.0

- Total non-current assets to Total Assets down from 63.9% to 63.6%

- Total current assets to Total Assets up from 36.1% to 36.4%

Annual Report [Year-on-year comparison: 2019 vs 2018]

Company Name : Toyota Motor Corporation (7203)
March 312019201820192018Change
DescriptionJPY mJPY m$US m$US m(%)
Sales Revenue28,105,33827,420,276253,517.7258,134.5Up 2.5
Total Revenue30,225,68129,379,510272,643.8276,578.7Up 2.9
EBITDA2,285,4652,620,42920,615.524,668.7Down 12.8
EBIT2,285,4652,620,42920,615.524,668.7Down 12.8
Pre-Tax Profit/(Loss)2,285,4652,620,42920,615.524,668.7Down 12.8
Profit/(Loss) after Tax1,882,8732,493,98316,98423,478.4Slumps 24.5
Working Capital652,299355,7655,883.93,349.2Up 83.4
Current Assets18,879,23718,152,656170,295.8170,889.1Up 4
Current Liabilities18,226,93817,796,891164,411.9167,539.9Up 2.4
Shareholders' Funds20,565,21019,922,076185,503.7187,546.4Up 3.2
Total Liabilities31,371,73930,386,173282,981.5286,055.4Up 3.2
Total Assets51,936,94950,308,249468,485.2473,601.9Up 3.2
Current Debt9,599,2339,341,19086,587.787,938Up 2.8
Non-Current Debt10,550,94510,006,37495,172.494,200Up 5.4
Total Debt20,150,17819,347,564181,760182,138Up 4.1
Operating Cash Flow3,766,5974,223,12833,975.739,756.5Down 10.8
Net Assets20,565,21019,922,076185,503.7187,546.4Up 3.2
Net Tangible Assets20,565,21019,922,076185,503.7187,546.4Up 3.2

Year-on-year comparison of Per Share figures

March 312019201820192018Change (%)
DescriptionJPY JPY $US $US
EPS Final650.58425.97.9Slumps 22.7
    EPS Growth Factor*1.08    

* EPS Growth Factor = Net Profit growth / EPS growth

Year-on-year comparison of Performance Ratios

March 3120192018Change (%)
Return on Equity (%)9.713Down 25.4
Return on Assets (%)3.85.1Down 25.5
Total debt to net tangible assets (%)9897.1Up 0.9
Total Liabilities to EBITDA13.711.6Up 18.4
Total Liabilities to Operating Cash Flow8.37.2Up 15.7
Total Liabilities/Total Assets (Steady % from 0.6 to 0.6)0.60.6Steady
Common Size Ratios by Assets %
Total non-current assets to Total Assets 63.6 63.9 Down 0.5
Total current assets to Total Assets 36.4 36.1 Up 0.9
Other non-current assets to Total Assets 28.7 27.6 Up 4.0
Current Debtors to Total Assets 18.5 18.0 Up 2.8
Long-term investments to Total Assets 14.4 15.9 Down 9.4
Common Size Ratios by Sales %
Cost of Goods Sold to Sales 88.2 87.1 Up 1.2
Sales and marketing expenses to Sales 10.6 11.3 Down 6.0
Profit before tax to Sales 8.1 9.6 Down 15.2
Tax expenses to Sales 2.3 1.8 Up 25.0

Currency Conversion (March 31, 2019): $US1 = JPY110.86

Currency Conversion (March 31, 2018): $US1 = JPY106.22

Five-year record of growth and performance:

In the last 5 years Total Revenue averaged JPY28,615B ($US258.1B), EBITDA averaged JPY2,888.6B ($US26.1B) and Net Profit averaged JPY2,186.4B ($US19.7B). Compound Annual Growth Rate (CAGR) averaged 1.8% for Total Revenue, 0.6% for Net Profit and -9.2% for EBITDA.

DescriptionAnnual (JPY B)Annual ($US B)5-year Avg (JPY B)5-year Avg ($US B)5-year CAGR %
Total Revenue30,225.7272.628,615258.11.8
EBITDA2,285.520.62,888.626.1(9.2)
Operating Profit2,285.520.62,606.723.5(1.5)
Net Profit1,882.9172,186.419.70.6

Five-year record of EBITDA, Operating Profit, Net Profit, ROE, ROA and ROCE

In 2019 Net Profit Margin of 7.1% was below its 5-year Avg of 7.9% (All Figures in %)

Description20195-year Avg
EBITDA Margin8.110.4
Operating Profit Margin8.19.4
Net Profit Margin7.17.9
Return on Equity9.711.7
Return on Assets3.84.4
Return on Capital Employed6.88.2

7.4 Quarterly Report: Key Parameters

Quarterly Report Analysis Q4 2019: Toyota Motor EPS slides 33%

Toyota Motor (TO:7203), announced EPS of JPY156.0 ($US1.41) for the quarter-ended 31 March 2019 [Q4/2019], down 32.8% sequentially from JPY232.0 ($US2.1) in the previous quarter [Q3/2019].

Quarter-ended31 Mar [Q4/2019]31 Dec [Q3/2019]30 Sep [Q2/2019]
EPS, JPY156.0232.0174.0
Sequential growth in EPS %-32.7633.33-18.69
RevenueJPY7,750b ($US69.9b)JPY7,802b ($US70.4b)JPY7,311b ($US65.9b)
Sequential growth in Revenue %-0.666.71-0.7
Net ProfitJPY460b ($US4.1b)JPY181b ($US1.6b)JPY585b ($US5.3b)
Sequential growth in Net Profit %154.02-69.08-10.99

Compared with the previous corresponding period [PCP; Q4/2018], year-over-year [y.o.y.] EPS was down 3.7%, Revenue was up 2.2% and Net Profit was down 4.4%.

Quarter-ended31 Mar [Q4/2019]31 Mar [Q4/2018]
EPS, JPY156.0162.0
PCP growth in EPS %-3.722.73
RevenueJPY7,750b ($US69.9b)JPY7,583b ($US68.4b)
PCP growth in Revenue %2.211.88
Net ProfitJPY460b ($US4.1b)JPY481b ($US4.3b)
PCP growth in Net Profit %-4.4220.68

Major changes compared with previous corresponding period [Year-on-Year]:

Favourable Changes:

- Total revenue up 2.2% from JPY7,582.5b ($US71.4b) to JPY7,750.1b ($US69.9b)

Unfavourable Changes:

- Net profit down 4.4% from JPY480.8b ($US4.5b) to JPY459.6b ($US4.1b)

- EBIT to Sales down from 8.1% to 7.2%

- Profit before tax to Sales down from 8.1% to 7.2%

- Profit after tax to Sales down from 6.3% to 5.9%

Note:

- Tax expenses to Sales down from 3% to 2.3%

Currency Conversion (March 31, 2019): $US1 = JPY110.86

Currency Conversion (March 31, 2018): $US1 = JPY106.22

SECTION 8 CORPORATE PROFILE

8.1 Activities

Toyota Motor primarily conducts automobile, financial and other businesses. Its business segments are automotive operations, financial services operations and all other operations. Its automotive operations include the design, manufacture, assembly and sale of passenger cars, minivans and trucks and related parts and accessories. Toyota's financial services business consists primarily of providing financing to dealers and their customers for the purchase or lease of Toyota vehicles.

8.2 Top Management

The chairman is Takeshi Uchiyamada.

8.3 Issued Capital and MCap

Based on 3,260,000,000 issued shares the market capitalisation is JPY22,546.2 billion (US$211.6 billion).

8.4 Vanguard Total World Stock ETF 7701:

The stock was one of 7701 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 11,100 shares in the period May 31, 2019 to Jun 30, 2019 worth $US-73,562,212 at an estimated Volume Weighted Average Price (VWAP) of $US6627.2263. As at Jun 30, 2019, the Vanguard Total World Stock ETF held 827,394 shares worth $US50,934,627 or 0.29% by value of the ETF's portfolio [Ranked 37 out of 7701 by value and 1 out of 1332 for Japan].

COMPANY IDENTIFIERS

Contact: 81 56 52 82 12 1

Physical Address: 1 Toyota-cho Toyota City Aichi, 471-0826 Japan

State/Province/Country: ACH, Japan

Country of Incorporation: Japan

Exchange: Tokyo Stock Exchange

Business Sector: Transportation

Economic Sector: Industrials

ISIN: JP3633400001

TO:7203; TYO:7203; T:7203; JP:7203; 7203.T

RIC: 7203.T

Toyota Motor Corp

For comprehensive research on Toyota Motor Corporation, including details from the latest Annual Report and extensive financial data, please search by Company Name on source name "News Bites Stock Review" on Lexis-Nexis platforms.

Source: www.BuySellSignals.com