Nissan Continues To Impress

Oct. 1.11 | About: Nissan Motor (NSANY)

Nissan Motor Co. Ltd (OTCPK:NSANY) had another impressive month in August 2011 and is continuing to ramp up global production to meet growing demand. The company's main production plants are in Japan, Mexico, China, USA, and Spain. However, it has plans to invest $1.5 billion to set up a factory in Brazil with the goal of producing 200,000 vehicles per year. This would be a very sensible move toward bringing production closer to the consumers in South America.

In August 2011, Nissan's global production increased 23.9% year-over-year to 385,112 vehicles, which is an all-time record for the month of August. Production outside of Japan increased 34.9% to 295,850 units, with the biggest percentage increases being in Spain and Mexico.

Sales

Currently, Nissan sells more vehicles than it produces, which is a good sign. It also supports the company's global growth projections. For the First Quarter ending 6/30/11, Nissan sold 933,752 units or 6.9% higher than the previous quarter, while production for the same period was 924,347 units.

Global sales for August alone were 361,413 units, representing a 14.2% increase year-over-year, also an all-time high for the month of August.

Cost Cutting

Nissan CEO Carlos Ghosn reported recently that the yen's relative strength is still a concern for Nissan's domestic production. Since Nissan relies heavily on exports, a stronger yen makes vehicle exports more expensive. As such, Ghosn announced that the Kyushu plant in southwest Japan would start importing up to 90% of its parts from nearby Asian countries, mainly China and South Korea.

Financial Projections

Below is a summary of Nissan's financial projections for FY 2011 (April 1, 2011 through March 31, 2012), based on foreign exchange rate of 80 yen/dollar (source)

  • Net revenues of 9.4 trillion yen (US $117.5 billion);
  • Operating profit of 460 billion yen (US $5.75 billion);
  • Net income of 270 billion yen (US $3.38 billion);
  • Capital expenditures of 410 billion yen (US $5.13 billion); and
  • R&D expenses of 460 billion yen (US $5.75 billion).

In comparison, fiscal year ending 3/31/11 saw net revenues of 8.7 trillion yen ($108.7 billion) and net income of 319 billion yen ($3.99 billion).

The stock is currently trading at $17.55, up $1.00 or 6% since a week ago. The 52-week range is $16.18 - $22.83. Compared to some of its competitors Toyota Motor Corp. (NYSE:TM) and Honda Motor (NYSE:HMC), Nissan has held its ground better during the past year:

Chart forNissan Motor Co. Ltd. (<a href='http://seekingalpha.com/symbol/NSANY' title='Nissan Motor Co., Ltd. ADR'>OTCPK:NSANY</a>)

Overall, Nissan's future is looking bright. The company is expanding rapidly overseas, while continuing to cut costs in its domestic production. In my opinion the stock's current price level, dragged down to just above 52-week low, offers plenty of upside and little downside.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.