We prefer auto parts as they are less
exposed to exchange rate changes, less
dependent on the North American
market, and better positioned to grow in
emerging markets than automakers
􀀗 Following H1 results announcements,
we have adjusted our forecasts, target
prices and ratings, resulting in four
rating upgrades
􀀗 Our top picks are Musashi Seimitsu and
Aisin Seiki, although they do not offer
the greatest potential upside
Parts makers preferred to automakers
Following the interim results announcements of the 12 auto
parts companies under coverage, we have adjusted our
forecasts, target prices and ratings. We have raised the
ratings on four parts makers.
These 12 auto parts companies have outperformed TOPIX
by 16% over the past six months and by 6% over the past
three, about the same as the 5% outperformance by the 11
Japanese automakers under coverage. However, we expect
the auto parts companies to increase their earnings more
rapidly than the automakers, for three reasons: 1) the parts
makers are less exposed to yen exchange rates, so their
earnings will be eroded less by the ongoing yen appreciation,
2) the parts makers earn a smaller portion of their earnings in
North America, a market that may slow, 3) the parts makers
are better positioned to grow in emerging markets, such as
China. Given the better earnings growth prospects of the
parts makers, their share price performance over the past
three months, relative to the automakers, indicates that they
are undervalued. We prefer the parts makers.
Based on the interim results, the Tokyo Motor Show and
some international automobile conferences, we expect the
growth/share prices of Japanese auto parts makers to depend
on 3 factors over the longer term: 1) strategy in India, 2)
increasing customers and markets, and 3) improving
financial efficiency and increasing returns to shareholders.

目录

Summary 3
Interim results 6
Good first half 6
Rating changes 7
Strategies for long-term growth 8
Leaders in emerging markets 8
China less appealing, India more 11
Strategy for India 11
Diversification of customer base 11
Growth model for parts makers 12
Improving financial efficiency, shareholder returns 14
Toyota Boshoku (3116) 15
Piolax (5988) 19
Tokai Rika (6995) 23
Musashi Seimitsu Industry (7220) 27
Akebono Brake Industry (7238) 31
Calsonic Kansei (7248) 35
Pacific Industrial (7250) 39
Keihin Corp. (7251) 43
Aisin Seiki (7259) 47
Aisan Industry (7283) 51
Nifco (7988) 55
Denso Corp. (6902) 60
Disclosure appendix 63
Disclaimer 66