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Old 30th August 2017, 09:03   #106
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Default Re: Guide: Investing in shares of the automotive sector

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Do you intend to settle down permanently in Japan? If no, isn't it simpler to invest in Indian stocks? I guess you will face some currency (INR JPY exchange rate fluctuations) risk if you invest in India though.
Hello smartcat

As of now, I have no immediate plans to return to India. I may continue in Japan for a long time, or move to some other country. In any case, sending money to India is not something I would like to do right now, due to several reasons.

Cheers!
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Old 4th September 2017, 18:58   #107
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Default Re: Guide: Investing in shares of the automotive sector

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I understand this is question does not belong to this thread, but still I'll ask. It is about the site www.marketsmojo.com. How good is this site? Before investing in a stock, can I simply just look for three green lights from this site? I ask this since I'm a beginner. Even though you have explained in very simple terms, it will be a while before I get a hang of those.
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Old 5th September 2017, 11:13   #108
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Default Re: Guide: Investing in shares of the automotive sector

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I understand this is question does not belong to this thread, but still I'll ask. It is about the site www.marketsmojo.com. How good is this site? Before investing in a stock, can I simply just look for three green lights from this site? I ask this since I'm a beginner. Even though you have explained in very simple terms, it will be a while before I get a hang of those.
Simple answer is no. Do not go by any recommendations on any of the sites. Use these sites for information and getting the numbers but you need to apply your own judgment and analysis on top of it. That automatically means that to invest in direct equity you need to spend some amount of time.
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Old 11th September 2017, 14:24   #109
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Default Re: Guide: Investing in shares of the automotive sector

Quite a few leading countries, including India, are talking about switching to electric cars. From components perspective, electric cars are significantly different from IC cars. Wouldn’t this impact many of the auto component makers and other auto ancillaries in big way?

Either they would be become obsolete or would need to make significant changes in their businesses. These changes may require fresh capital investment and technology acquisition / development. These would impact their financials.

This disruption could also lead to churn in market positions. Some of the current market leaders may become insignificant players. New leaders may emerge.

It would be interesting time for auto stock picking (and dropping).

Last edited by tsk1979 : 23rd September 2017 at 04:09.
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Old 11th September 2017, 14:50   #110
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Default Re: Guide: Investing in shares of the automotive sector

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. From components perspective, electric cars are significantly different from IC cars. Wouldn’t this impact many of the auto component makers and other auto ancillaries in big way?
For majority of auto component players, it really does not matter much. If you are making suspension, braking or sheet metal body components, how does it matter if the car is powered by batteries or petrol? Yes, a small percentage of listed companies that make engine components, fuel tanks or drive shafts - they need to start diversifying.

Meanwhile, Motherson Sumi MD thinks shift to EVs will be a huge positive for his company.

No need to exit any stock as of now. Auto ancillary companies will invest in EV component manufacturing when they are nudged by the car makers.
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Old 11th September 2017, 14:53   #111
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Default Re: Guide: Investing in shares of the automotive sector

@smartcat: Thanks for your reply

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Motherson Sumi MD thinks shift to EVs will be a huge positive for his company.
Could you please elaborate on this part?

Last edited by vagabond128 : 11th September 2017 at 14:54.
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Old 11th September 2017, 15:53   #112
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Default Re: Guide: Investing in shares of the automotive sector

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Could you please elaborate on this part?
Check out this short interview of VC Sehgal
http://www.moneycontrol.com/news/bus...i-2380429.html

Wiring & electrical systems constitute a significant part of Motherson's revenues. And he seems to imply that EVs need more of this stuff. From their website:

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We manufacture Wiring Harnesses, High tension cords, battery cables and high level assemblies. The complete vertical integration for manufacturing critical wiring harness components like wires, connectors, terminals, grommets, junction boxes, relay boxes, protectors etc., enables MSSL to provide quality products with reduced time to market.

The capability of designing and manufacturing of jigs, fixtures, applicators, circuit checking & assembly boards, supported by state of the art facilities for wiring harness & component testing, makes the company a full system solutions provider
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Old 13th September 2017, 12:04   #113
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Default Re: Guide: Investing in shares of the automotive sector

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Wiring & electrical systems constitute a significant part of Motherson's revenues.
Truly. Motherson is part of my portfolio and I'll buy some more.

Thinking of Hero MotoCorp too - what do you think, Smartcat? Also, right now, between Tata & Ashok Leyland, which would you recommend more? Thanks.
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Old 13th September 2017, 13:13   #114
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Default Re: Guide: Investing in shares of the automotive sector

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Thinking of Hero MotoCorp too - what do you think, Smartcat? Also, right now, between Tata & Ashok Leyland, which would you recommend more? Thanks.
Hero Motocorp is a safe but boring investment. Despite aggressive Honda moves, Hero is chugging along at 10% CAGR profit growth. Probably because of brand value, trust factor (like Maruti) and dealership reach in tier 2/3 cities and towns.

Between Tata Motors and Ashok Leyland, the former is a slightly better buy from valuations point of view. But both are decent buys at this point of time if you don't have any exposure to it.

We can expect Tata Motors passenger car division to gain market share from others over the next few years and JLR outlook too is positive. CV division is down in the dumps and Tata Motors is resorting to heavy discounting to regain market share. Ashok Leyland is gaining market share in CV space. Plus they have good exposure to defence space.

Meanwhile, there is an incredible amount of news flow on electric vehicles and India.

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But perhaps it is a bit too early to write an obituary for internal combustion engine and oil companies. The Oil & Gas index has doubled in the past 2 years, probably because of reforms in the sector.

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Sales volumes are still growing at 5% per annum. I guess we will get to the inflection point only when IOC/BPCL/HPCL sales volumes stagnate and starts trending downwards.
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Old 16th September 2017, 15:25   #115
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Default Re: Guide: Investing in shares of the automotive sector

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Sales volumes are still growing at 5% per annum. I guess we will get to the inflection point only when IOC/BPCL/HPCL sales volumes stagnate and starts trending downwards.
Bit of a chicken and egg though, is it not? Also, O&G seems to be going steady but in part it is driven by Oil prices as well.

EV, equally confusing, seems to be a very long term investment at this point particularly with Indian cos. Range and availability of Infra are going to be major derailers at lower price point which accounts for majority of Indian automobile business. Even the 2-wheeler market where the range really isn't that much of an issue, we see hardly any pickup.

Last edited by suhaas307 : 19th September 2017 at 13:33. Reason: Fixed quote tags
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Old 17th September 2017, 07:52   #116
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Default Re: Guide: Investing in shares of the automotive sector

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Quite a few leading countries, including India, are talking about switching to electric cars.
Very true. Governments across teh globe have always taken very bold stands on the topic of emissions till now . And with the exception of the most developed countires( us, EU and japan) these statements have faltered. India too took an eternity to move from Euro III to Euro IV. (Planned 2014, executed 2017). This is not a one off case. Indonesia took the leap sometime back and are still in Euro II.

The problem will come with passing the cost to the customer. If past experience is to be considered, Euro 6 and electric too shall meet the same fate.

There is always space for diesel, petrol CNG and also electric. This % will vary and certainly Electric is the next big thing. But most certainly not in the time frame our governments promise.

So from an investment stand point, I think anything to do with Electric is now very premature. The companies(tesla for example) are over valued and will correct thier valuations in the future. Better to wait for the correction, rather than invest now.
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Old 19th September 2017, 13:23   #117
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Default Re: Guide: Investing in shares of the automotive sector

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We can expect Tata Motors passenger car division to gain market share from others over the next few years and JLR outlook too is positive. CV division is down in the dumps and Tata Motors is resorting to heavy discounting to regain market share. Ashok Leyland is gaining market share in CV space. Plus they have good exposure to defence space.
.
Hi Smartcat,
While investing ,which P & L statement shall we follow.Standalone or consolidated. As in Tata Motors case Consolidated Operating profit and interest looks very positive but standalone its a loss making company.
Thanks
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Old 19th September 2017, 14:12   #118
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Default Re: Guide: Investing in shares of the automotive sector

Hello smartcat

Thanks to your advice, I finally started my investment in Japanese stock market with Toyota Motor Corp.

Need your advice on another stock this time - Toshiba Corp (TYO:6502).

I know that Toshiba has been in the news for all the wrong reasons in the recent past, and it may not be the best time to invest in the stock (with the sale of the chip unit etc). I could not decipher what exactly is going on with the company. On one hand, they have put up their chip unit for sale, where as I see that they have invested quite a lot of money into the Li-ion battery plant (Suzuki-Toshiba-Denso / 50:40:10) coming up in Gujarat. P.E. ratio is < 4% where as the market-cap is only 20% of the 2016 annual revenue. (May be I am reading it wrong?).

The stock price is also pretty much the life-time low (JPY 315 at today's closing). Do you think Toshiba Corp can be a dark horse in the long run? Say, in 5 years when the Li-ion battery plant is running at full-steam? And with partners such as Suzuki and Denso (Toyota, basically), I think the project is in good hands. Or should I stay far away from this one? (Especially because I cannot expect any dividend income in the short-term).

Looking forward to your wise words! Thanks!
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Old 19th September 2017, 14:34   #119
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Default Re: Guide: Investing in shares of the automotive sector

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While investing ,which P & L statement shall we follow.Standalone or consolidated. As in Tata Motors case Consolidated Operating profit and interest looks very positive but standalone its a loss making company.
Always look at consolidated numbers while evaluating a company.

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Do you think Toshiba Corp can be a dark horse in the long run? Or should I stay far away from this one?
Took a quick look - no revenue growth, no dividends and losses at even operational level. Stick to companies with strong fundamentals.
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Old 22nd September 2017, 15:39   #120
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Default Re: Guide: Investing in shares of the automotive sector

Hello smartcat

Back with another request - this time for Bridgestone Corp (TYO:5108).

Trying to stick to your advice on investing in companies with strong fundamentals, I have been searching for automotive stocks (it's my field of work, and the only one I understand) which are worth investing in.

Using the same parameters that you had used for evaluating the Toyota stock;

Market cap: JPY 4.1 Trillion
P/E Ratio: 14.38
P/BV Ratio: ?? (could not find this info)
Dividend yield: 2.8%
Return on equity: 12.69%
Debt to equity ratio: 0.21
Net profit margin: 8.24%

I could not find a reliable figure for the estimated CAGR over the next few years. But I cannot think of a reason why tire sales should change drastically due to other technological developments (EVs, autonomous driving etc).

Apparently, Bridgestone is the only tire maker that has been consistently paying / raising dividends (despite a drop in earnings in 2016).

Will wait for your suggestion.
Thanks!

Last edited by Viju : 22nd September 2017 at 15:41.
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