Since last year, the Japanese stock market began to rise sharply, completely breaking through the high position during the bubble economy, drawing attention from investors around the world. Among these, the Japanese company with the highest listing value in history was bothersome and repeatedly reached new highs, and became one of the companies that boosted the Nikkei Index the most. He was —$Toyota Motor (TM.US)$.
Established in 1937 by Kiichiro Toyota, Toyota Motor Corporation is one of the world's largest automobile manufacturers. It is in a leading position in hybrid technology. Popular models such as the Corolla and RAV4 are popular models that are popular in mainland Japan, Europe, America, and China. Toyota is one of the companies with the highest sales volume of automobiles in the world, and has now been the top seller in the world for four consecutive years.
By the close of the US stock market on March 25, Toyota had risen more than 90% in two years to 252.41 US dollars, with a total market value of 34.4 billion US dollars. As one of the “Seven Samurai of Japan” selected by Goldman Sachs, Toyota's stock price performance is comparable to that of the “Big Seven US Stock Companies,” and the increase in the past two years has greatly surpassed that of its counterpart Tesla.
Weakening yen and increased production and sales to help Toyota complete a counterattack
The Toyota fire was mainly due to several factors, including weakening yen, increased production and sales, and undervaluation of Japanese stocks.
First, the weakening yen is a big plus for export-oriented Japanese companies like Toyota. Since most of Toyota's production costs are calculated in yen, and overseas sales are in local currency, when the yen depreciated, Toyota's revenue in yen was higher, thereby increasing profit margins. The depreciation of the yen gave Toyota products a price advantage in overseas markets, which also helped increase sales to a certain extent.
Second, thanks to the recovery of the manufacturing industry and consumer love, Toyota has continuously taken the top spot in global automobile sales. Last year, Toyota's global sales increased 7.2% to a record 11.2 million units, 2 million units more than the second-ranked majority. Due to the easing of supply restrictions and the return to normalization of production, the company's production growth has returned to its peak in 2019, escaping the haze of three years of the pandemic.
According to Toyota's latest financial report, Toyota's sales volume is mainly in Japan, North America, and Europe. In an environment where sales of pure electric vehicles are generally sluggish, Toyota's sales growth rate in these regions can reach more than 16%. Goldman Sachs analysts believe that the market is reconsidering the potential of hybrid products, which is Toyota's advantage.
The sales performance was remarkable, which unsurprisingly contributed to the high increase in performance. In the quarter ended December 31 of last year, Toyota achieved a total operating profit of 1.68 trillion yen, an increase of 75.7% year over year, far exceeding analysts' expectations of 1.3 trillion yen. Meanwhile, Toyota is quite optimistic about this fiscal year's results, raising its full-year profit forecast by 9% to 4.9 trillion yen (about 33 billion US dollars). After the results were announced, Toyota's stock price surged nearly 8% on the same day.
The trend of oil and electricity offense and defense alternates? Toyota surged, yet Tesla was repeatedly bearish
The stock prices of Tesla and Toyota both performed well last year. However, entering 2024, the trends of the two companies were quite different. Toyota's US stock has risen close to 40% this year, yet Tesla's stock price is hovering at a low point, falling by more than 30% during the year.
The divergence of trends between the two can be seen from the comparison of performance. Toyota's profit margin surpassed Tesla in the first half of 2023, and it is likely that it will once again become the most profitable car company in the world. In contrast, Tesla cut prices frequently, and gross margin fell for four consecutive quarters, causing analysts to speak out.
Looking at this month, many investment banks, including Morgan Stanley, Deutsche Bank, Wells Fargo, UBS, Goldman Sachs, and Mizuho, have lowered Tesla's target price. The lowest of these was $128 offered by Wells Fargo, which is 25% lower than Tesla's current stock price.
Daimo strategist Adam Jonas analyzed the reason for the gap between these two electric car companies and traditional car companies. He said that the US market is transitioning from early adopters of electric vehicle technology to mainstream buyers, yet many mainstream buyers are unwilling to accept higher prices than gasoline cars. Toyota was criticized for its slow pace of electrification transformation, but now the situation has been reversed, and its strategy of focusing on hybrid vehicles has proven successful.
Despite Toyota's strong trend, its current market capitalization and price-earnings ratio are still far below Tesla's. According to Futubull Niu Niu market data, Toyota's latest market value is 34.4 billion US dollars, which is still about 60% lower than Tesla; Toyota's TTM is 11.58, while Tesla's is 40.15.
Jonas said that if Tesla's stock price falls 30% from the current level to the position of $120, the crown of “the world's most valuable car company” will be returned to Toyota. “The difference between these two companies symbolizes changes in the tastes of global car consumers, and sales of electric vehicles in major markets are slowing down.”
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