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State Bank of India
- Sector: Financial Services
- Sub Sector: Banks
- Country: India
- Bond: SBIIN 4.875 28
- Indicative Yield-to-Maturity (YTM): 5.23%
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Fundamental View
AS OF 27 Mar 2025State Bank of India (SBI) is the largest state-owned bank in India and is in some respects the country’s flagship bank. Given the bank’s ~57% government ownership and systemic importance, government support for SBI is very strong.
The bank’s capital buffers are relatively low, but we take comfort in the strong government support.
Business Description
AS OF 27 Mar 2025- State Bank of India is the largest commercial bank in India. Its predecessor banks date back to the 19th century. In the early 20th century, they merged to form the Imperial Bank of India, which became the State Bank of India after India gained independence in 1947.
- The Government of India remains the largest shareholder with a 56.92% stake. Per the SBI Act, the government's shareholding cannot fall below 55%.
- SBI's merged with its 5 associate banks and Bharatiya Mahila Bank in 2018. The merger catapulted SBI into one of the world's 50 largest banks.
- The bank has 85% of its loans in the domestic market, and has steadily increased its international business too over the past few years with offices across all international business centres. The domestic book is split 42% retail, 34% corporates, ~14% SMEs and ~10% to the agri segment as of end-December 2024.
- It has diversified its operations with well regarded subsidiaries in the areas of fund management, credit cards, insurance, and capital markets.
Risk & Catalysts
AS OF 27 Mar 2025SBI does not have a strong buffer vs. the regulatory minimum of 8%, but its size, systemic importance and majority government shareholding confer particularly strong government support. But consequentially, any deterioration in the sovereign ratings will also affect the bank’s credit.
Increasing consolidation in the country’s financial space may narrow the gap between SBI’s market leading position vs its peers, particularly HDFC Bank.
Continued tight system liquidity has led to pressure on margins and loan growth of the Indian banks, but SBI’s less tight liquidity position than its private sector peers has allowed it to buck the industry trend and record relatively brisk loan growth that is ahead of deposit growth.
Asset quality is also trending well despite a stretched urban middle and lower-middle class consumer class, and slower than anticipated economic activity in India, as SBI’s personal unsecured loans book is ~95% to salaried employees of top tier corporates and the government.
Key Metric
AS OF 27 Mar 2025| INR mn | FY21 | FY22 | FY23 | FY24 | 9M25 |
|---|---|---|---|---|---|
| NIM | 3.04% | 3.12% | 3.37% | 3.28% | 3.12% |
| ROAA | 0.48% | 0.67% | 0.96% | 1.04% | 1.09% |
| ROAE | 8.4% | 11.9% | 16.5% | 17.3% | 17.1% |
| Equity to Assets | 5.6% | 5.6% | 5.9% | 6.1% | 6.6% |
| CET1 Ratio | 10.3% | 10.3% | 10.6% | 10.6% | 9.8% |
| Gross NPA Ratio | 4.98% | 3.97% | 2.78% | 2.24% | 2.07% |
| Provisions/Loans | 1.77% | 0.91% | 0.54% | 0.14% | 0.30% |
| PPP ROA | 1.65% | 1.58% | 1.59% | 1.60% | 1.65% |
CreditSight View Comment
AS OF 06 May 2025SBI is India’s largest bank and a well-run franchise. Government support underpins SBI’s relative positioning, while fundamentally, it has good operating metrics and business plans, a sufficient (though could be higher) CET1 ratio, and the best management among the public sector banks. SBI’s less tight LDR position than its private sector peers has allowed it to have continued higher loan growth than deposit growth in in F9M25. India’s macro backdrop remains relatively robust and SBI’s lower risk personal unsecured loans clientele is supporting asset quality well. Rate cuts will feed through to the NIM in FY26. Improved system liquidity however will provide some support for the NIM and loan growth. We like the name, but move it back to M/P as it now trades a few bp inside HDFCB.
Recommendation Reviewed: May 06, 2025
Recommendation Changed: April 25, 2025
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Fundamental View
AS OF 26 Mar 2025Nissan’s core business remains weak but is showing some initial green shoots of improvement. While automotive profitability is expected to remain negative through the end of FY24 in March 2025, it posted 10% retail sales growth in the US in F3Q24 and targets further 16% YoY growth in F4Q24. Management expects the improved sales velocity, driven by the launch of refreshed 2025 model year vehicles, to help reduce dealer inventories by 20% in the current quarter and set the stage for lower incentive spending and improved profitability in FY25. While profit improvement in the US would be a positive development in FY25, the turnaround in its second-largest market, China, will likely take longer as it strives to develop and launch new energy vehicles for that market.
Business Description
AS OF 26 Mar 2025- Nissan, with headquarters in Yokohama, Japan, is a leading global automotive manufacturer with a market presence in many countries around the globe. The company’s growth investments are focused primarily on Japan, North America, and China, core markets with large profit pools in which Nissan has a meaningful market share. The company’s business in China is conducted through a joint venture with Dongfeng Motor Corporation.
- Nissan’s Sales Financing segment supports the sale of its vehicles by providing financing solutions to its customers and dealers. To enhance their creditworthiness, Nissan maintains keepwell (support) agreements with its wholly owned financial subsidiaries including Nissan Motor Acceptance Corporation (NMAC) in the United States and Nissan Financial Services (NFS) in Japan.
- The Renault-Nissan-Mitsubishi Alliance was established in 1999 to enhance member company scale in product development and raw material purchasing. The alliance includes equity participation, which led to Nissan holding ownership stakes in Renault (15% non-voting) and Mitsubishi (34%) and Renault holding an ownership stake in Nissan (43%). The Alliance’s automobile production volume is the third largest globally behind Toyota and Volkswagen.
Risk & Catalysts
AS OF 26 Mar 2025Management reiterated its FY24 targets for production volumes and retail sales, both of which it lowered with the release of last quarter results. It targets 3.2 mn units of production and 3.4 mn units of retail sales, down 7% and 2%, respectively, as it strives to reduce dealer inventories of old model year vehicles to make way for new model year vehicle launches. The retail sales decline is broad-based across most regions, with the steepest decline of 12% in China. However, management targets a 6% retail sales increase in North America, its largest region by volume that is projected to account for 39% of the company’s unit volume in FY24.
Despite the unchanged production and retail sales volume expectations, management lowered its revenue by 2% based on slightly lower wholesale volumes and higher variable marketing expenses. It also lowered its consolidated operating profit outlook by 20% as the benefits of currency and lower raw materials is expected to be offset by high sales incentives, lower volume/mix, and higher manufacturing and other costs. The revised FY24 guidance implies a consolidated operating margin of 1.0%.
Key Metric
AS OF 26 Mar 2025| ¥ bn | FY20 | FY21 | FY22 | FY23 | LTM F3Q24 |
|---|---|---|---|---|---|
| Revenue | 6,843 | 7,393 | 9,573 | 11,524 | 11,411 |
| EBIT | (471) | (42) | 242 | 409 | 57 |
| EBIT Margin | (7%) | (1%) | 3% | 4% | (1%) |
| EBITDA | (201) | 247 | 559 | 760 | 419 |
| EBITDA Margin | (2.9%) | 3.3% | 5.8% | 6.6% | 2.5% |
| Total Liquidity | 4,096 | 3,601 | 3,658 | 4,196 | 3,790 |
| Net Debt | (636) | (728) | (1,213) | (1,546) | (1,546) |
| Total Debt | 1,260 | 973 | 687 | 468 | 468 |
| Gross Leverage | n/m | 3.9x | 1.2x | 0.6x | 1.1x |
| Net Leverage | 3.2x | -2.9x | -2.2x | -2.0x | -3.7x |
CreditSight View Comment
AS OF 01 May 2025Our Underperform recommendation on Nissan Motor and Nissan Motor Acceptance Corporation (NMAC) notes is based on our view the notes are subject to downside risk from the recently enacted US auto import tariffs that could thwart its profit improvement initiatives in teh US and weigh on its credit rating. The major risk to our underperform recommendation is a potential partnership with Foxconn, KKR, Tesla, or Honda, the latter of which could lead to expectations for a near-term rating upgrade back to investment grade.
Recommendation Reviewed: May 01, 2025
Recommendation Changed: February 26, 2025
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Fundamental View
AS OF 26 Mar 2025Absent the potential increase in leverage and complexities of integrating the business with Nissan, Honda management is returning its focus to increasing the production and sale of hybrid vehicles while accelerating investments in electric vehicles to potentially catch up to competitors in China and other markets. The company’s plan to repurchase up to 24% of its outstanding shares in 2025 remains intact but should not adversely impact the company’s fortress balance sheet.
Business Description
AS OF 26 Mar 2025- Honda Motor Co., Ltd. engages in the manufacture and sale of automobiles, motorcycles, and power products. It operates through the following segments: Automobile, Motorcycle, Financial Services, and Power Product and Other Businesses. The Automobile segment manufactures and sells automobiles and related accessories. The Motorcycle segment handles all-terrain vehicles, motorcycle business, and related parts. The Financial Services segment provides financial and insurance services.
- American Honda Finance Corporation (AHFC) is a wholly-owned subsidiary of American Honda Motor Co., Inc. (AHM or the Parent). Honda Canada Finance Inc. (HCFI) is a majority-owned subsidiary of AHFC. Non-controlling interest in HCFI is held by Honda Canada Inc. (HCI), an affiliate of AHFC. AHM is a wholly-owned subsidiary and HCI is an indirect wholly-owned subsidiary of Honda Motor Co., Ltd. (HMC). Honda Motor Co. (HMC) maintains Keep Well (support) agreements with its North American finance subsidiaries, AHFC and HCFI. Under the Keep Well agreements, HMC agrees to (1) maintain at least 80% ownership in AHFC and HCFI, (2) ensure AHFC and HCFI maintain a positive net worth, and (3) ensure both AHFC and HCFI have sufficient liquidity to meet their debt payment obligations.
Risk & Catalysts
AS OF 26 Mar 2025Management raised its FY25 motorcycle wholesales forecast by 2% but lowered its automobile wholesales forecast for the third consecutive quarter, this time by as modest 1% after decreases of 3% and 5% the previous two quarters. Motorcycle wholesales are now projected to increase 9% YoY, driven by growth in Asia (+9%) – which is expected to account for 85% of total motorcycle wholesales – along with growth in all other regions. The company’s lower automobile wholesale forecast is driven by a downward revision in Japan and Europe, with the former related to the increasingly competitive environment in that country.
Management maintained its FY25 consolidated operating profit forecast but noted some underlying changes to the composition of the forecast. It expects FY25 profit to be reduced by lower automobile unit sales, lower price and higher cost revisions, and increased expenses, all of which are projected to be offset by a favorable currency impact. Consolidated operating profit margins of 6.6% in FY25 were revised lower by 20 bp and are also expected to be 20 bp lower on a YoY basis.
Key Metric
AS OF 26 Mar 2025| $ mn | FY21 | FY22 | FY23 | FY24 | F3Q25 |
|---|---|---|---|---|---|
| Total Company Earning Assets | 76,778 | 71,105 | 65,363 | 74,626 | 81,564 |
| Cash and Investments | 1,870 | 2,607 | 1,544 | 1,670 | 1,591 |
| Excess Liquidity | 8,870 | 9,607 | 8,544 | 8,670 | 8,591 |
| Unsecured Debt | 43,037 | 38,026 | 33,410 | 41,566 | 46,548 |
| Secured Debt | 8,890 | 8,888 | 6,927 | 9,351 | 11,007 |
| Total Debt | 51,927 | 46,914 | 40,337 | 50,917 | 57,555 |
| Allowance % Retail Rece. | 0.75% | 0.58% | 0.71% | 0.80% | 0.83% |
| Allowance / Net Charge-offs | 2.41x | 3.75x | 2.41x | 1.72x | 1.59x |
| Net Charge-offs % Avg. Receivable | 0.33% | 0.15% | 0.29% | 0.52% | 0.52% |
| 30+ Day Delinquency Rate | 0.7% | 1.1% | 1.2% | 1.2% | 1.6% |
CreditSight View Comment
AS OF 07 May 2025We maintain a Market perform recommendation on Honda Motor Co. and American Honda Finance Corporation based on relative value, our view the profit headwind related to the recently enacted US auto import tariffs will be manageable within the context of its current credit rating, and our expectation that the potentially negative rating headwind related to an acquisition of or merger with Nissan has largely abated.
Recommendation Reviewed: May 07, 2025
Recommendation Changed: April 14, 2025
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International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 26 Mar 2025Absent the potential increase in leverage and complexities of integrating the business with Nissan, Honda management is returning its focus to increasing the production and sale of hybrid vehicles while accelerating investments in electric vehicles to potentially catch up to competitors in China and other markets. The company’s plan to repurchase up to 24% of its outstanding shares in 2025 remains intact but should not adversely impact the company’s fortress balance sheet.
Business Description
AS OF 26 Mar 2025- Honda Motor Co., Ltd. engages in the manufacture and sale of automobiles, motorcycles, and power products. It operates through the following segments: Automobile, Motorcycle, Financial Services, and Power Product and Other Businesses. The Automobile segment manufactures and sells automobiles and related accessories. The Motorcycle segment handles all-terrain vehicles, motorcycle business, and related parts. The Financial Services segment provides financial and insurance services. The Power Products and Other Businesses segment offers power products and relevant parts.
- American Honda Finance Corporation (AHFC) is a wholly-owned subsidiary of American Honda Motor Co., Inc. (AHM or the Parent). Honda Canada Finance Inc. (HCFI) is a majority-owned subsidiary of AHFC. Non-controlling interest in HCFI is held by Honda Canada Inc. (HCI), an affiliate of AHFC. AHM is a wholly-owned subsidiary and HCI is an indirect wholly-owned subsidiary of Honda Motor Co., Ltd. (HMC). Honda Motor Co. (HMC) maintains Keep Well (support) agreements with its North American finance subsidiaries, AHFC and HCFI. Under the Keep Well agreements, HMC agrees to (1) maintain at least 80% ownership in AHFC and HCFI, (2) ensure AHFC and HCFI maintain a positive net worth, and (3) ensure both AHFC and HCFI have sufficient liquidity to meet their debt payment obligations.
Risk & Catalysts
AS OF 26 Mar 2025Management raised its FY25 motorcycle wholesales forecast by 2% but lowered its automobile wholesales forecast for the third consecutive quarter, this time by as modest 1% after decreases of 3% and 5% the previous two quarters. Motorcycle wholesales are now projected to increase 9% YoY, driven by growth in Asia (+9%) – which is expected to account for 85% of total motorcycle wholesales – along with growth in all other regions. The company’s lower automobile wholesale forecast is driven by a downward revision in Japan and Europe, with the former related to the increasingly competitive environment in that country.
Management maintained its FY25 consolidated operating profit forecast but noted some underlying changes to the composition of the forecast. It expects FY25 profit to be reduced by lower automobile unit sales, lower price and higher cost revisions, and increased expenses, all of which are projected to be offset by a favorable currency impact. Consolidated operating profit margins of 6.6% in FY25 were revised lower by 20 bp and are also expected to be 20 bp lower on a YoY basis.
Key Metric
AS OF 26 Mar 2025| ¥ bn | FY21 | FY22 | FY23 | FY24 | LTM F3Q25 |
|---|---|---|---|---|---|
| Revenue | 10,908 | 11,967 | 14,167 | 17,434 | 18,555 |
| EBIT | 576 | 741 | 612 | 1,219 | 1,148 |
| EBIT Margin | 5.3% | 6.2% | 4.3% | 7.0% | 6.5% |
| EBITDA | 1,175 | 1,334 | 1,294 | 1,964 | 1,879 |
| EBITDA Margin | 10.8% | 11.1% | 9.1% | 11.3% | 10.2% |
| Total Liquidity | 3,717 | 4,612 | 4,926 | 6,150 | 6,182 |
| Net Debt | (2,048) | (2,481) | (2,751) | (3,762) | (3,779) |
| Total Debt | 480 | 837 | 803 | 863 | 877 |
| Gross Leverage | 0.4x | 0.6x | 0.6x | 0.4x | 0.5x |
| Net Leverage | -1.7x | -1.9x | -2.1x | -1.9x | -2.0x |
CreditSight View Comment
AS OF 07 May 2025We maintain a Market perform recommendation on Honda Motor Co. and American Honda Finance Corporation based on relative value, our view the profit headwind related to the recently enacted US auto import tariffs will be manageable within the context of its current credit rating, and our expectation that the potentially negative rating headwind related to an acquisition of or merger with Nissan has largely abated.
Recommendation Reviewed: May 07, 2025
Recommendation Changed: April 14, 2025
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
How may we help you?
Search topics about wealth insights and investments.Hyundai Motor
- Sector: Manufacturing
- Sub Sector: Automotive
- Country: Korea
- Bond: HYNMTR 5.5 26
- Indicative Yield-to-Maturity (YTM): 4.834%
- Credit Rating : A
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Fundamental View
AS OF 26 Mar 2025Hyundai and Kia continued to post solid growth in global wholesales and retail sales, but its 4Q24 automotive operating profit declined YoY for a second consecutive quarter owing to higher sales incentives, rising labor and R&D costs, and a warranty provision revaluation impacted by currency. While its FY25 guidance calls for modest volume and revenue growth, its profit margins are expected to compress another 70 bp on the heels of 100 bp margin compression in FY24. Guidance does not include the potential impact of US import tariffs, which we believe would affect roughly 60% of its US vehicle sales and could further compress margin by another 60 bp to 230 bp, depending on which tariffs are implemented.
Business Description
AS OF 26 Mar 2025- Hyundai Motor Co., Ltd. engages in the manufacture and distribution of motor vehicles and parts. It operates through the following business areas: Vehicle, Financial and Other. The Vehicle division offers motor vehicles. The Financial division provides financing, leasing and credit cards. The Other division includes manufacture of railways. The company was founded on December 29, 1967, and is headquartered in Seoul, South Korea.
- Hyundai Capital America benefits from a support agreement with Hyundai Motor (HMC). HCA investor relations confirmed its support (keepwell) agreement contains a fixed charge coverage provision that it views as particularly strong compared to other peers.
Risk & Catalysts
AS OF 26 Mar 2025Hyundai Motor Group targets FY25 wholesale volumes of 7.4 mn units, up 2% YoY, comprised of 1% volume growth at Hyundai and 4% volume growth at Kia. Both automakers are projecting modest growth in most of their major markets, except for a 1% decline by Hyundai in Europe. Kia projects outsized growth in India (+22%), starting from a base that is less than half that of Hyundai. Revenue growth is also projected to be modest at 3%-4% for Hyundai and 4% for Kia.
The company projects FY25 revenue growth of 3%-4%, above its ~1% wholesale volume growth, based on higher average selling prices (ASPs) that are driven by increased volumes in North America, including higher sales of Genesis and eco-friendly cars. Automotive operating profit margins are projected to contract 60 bp at the midpoint of the range, based in part on higher sales incentives and enhanced European fuel regulations. Management noted its relatively strong FY25 profit outlook in a weak global demand market environment reflects its expectation for strong performance in North America, fueled in part by increased sales of hybrid and luxury vehicles. The company’s FY25 outlook does not include the potential impact of US tariffs.
Key Metric
AS OF 26 Mar 2025| KRW bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Revenue | 80,577 | 94,143 | 113,718 | 130,150 | 136,725 |
| EBIT | 890 | 5,459 | 8,950 | 15,440 | 14,189 |
| EBIT Margin | 1.1% | 5.8% | 7.9% | 11.9% | 10.4% |
| EBITDA | 5,076 | 10,015 | 13,998 | 20,387 | 18,786 |
| EBITDA Margin | 6.3% | 10.6% | 12.3% | 15.7% | 13.7% |
| Total Liquidity | 17,082 | 19,745 | 26,639 | 26,507 | 24,721 |
| Net Debt | (4,453) | (5,202) | (11,035) | (10,916) | (9,308) |
| Total Debt | 10,920 | 12,569 | 12,940 | 12,940 | 12,940 |
| Gross Leverage | 2.2x | 1.3x | 0.9x | 0.6x | 0.7x |
| Net Leverage | -0.9x | -0.5x | -0.8x | -0.5x | -0.5x |
CreditSight View Comment
AS OF 01 May 2025We upgrade our recommendation on notes of Hyundai Capital America (HYNMTR), Hyundai Capital Services (HYUCAP), and Kia Corp. (KIA) to Outperform from Market perform based on our view the company’s tariff mitigation strategies, its financial services and currency tailwinds, and South Korean automotive sector emergency aid initiatives should help support the company’s profit outlook and enable it to avoid credit rating downgrades. Our recommendation is based on relative value, its geographic diversification, increasing innovative hybrid and EV offerings, and its solid brand positioning within the affordable vehicle category.
Recommendation Reviewed: May 01, 2025
Recommendation Changed: April 28, 2025
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BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 25 Mar 2025Toyota is back on the path to normalized production schedules following its vehicle certification challenges in Japan during 1H25 that disrupted production of certain models. The company expects 10 mn units of retail sales in FY25, which would enable it to retain its place as the leading global automaker by volume. Toyota expects sales of its hybrid electric vehicles (HEVs) to account for 46% of retail sales this year, up from 37% in FY24, which is beneficial to customers and the company alike as management claims its HEVs are more profitable than its ICE vehicles. While Toyota was late to the BEV party and BEVs account for a paltry 1% of its retail sales, it has made significant BEV investments that will support the rollout of new BEV models and volumes over the next couple years.
Business Description
AS OF 25 Mar 2025- Toyota Motor Corp. (TMC) engages in the manufacture and sale of motor vehicles and parts. It operates through the following segments: Automotive, Financial Services, and All Other. The Automotive segment designs, manufactures, assembles and sells passenger cars, minivans, trucks, and related vehicle parts and accessories. Toyota is also involved in the development of intelligent transport systems. The Financial Services segment offers purchase or lease financing to Toyota vehicle dealers and customers. It also provides retail leasing through lease contracts purchased by dealers. The company was founded by Kiichiro Toyoda on August 28, 1937, and is headquartered in Toyota, Japan.
- Toyota Financial Services Corporation (TFSC), a wholly owned subsidiary of TMC, oversees the management of Toyota's finance companies worldwide. Toyota Motor Credit Corporation (TMCC) is the company’s principal financial services subsidiary in the United States. Under terms of the credit support agreement between TFSC and TMCC, TFSC agrees to: (1) maintain 100% ownership of TMCC; (2) cause TMCC and its subsidiaries to have a tangible net worth of at least $100,000; (3) make sufficient funds available to TMCC so that it will be able to service the obligations arising out of its own bonds, debentures, notes and other investment securities and commercial paper. The terms of the credit support agreement between TMC and TFSC are very similar to the terms of the TFSC and TMCC credit support agreement.
Risk & Catalysts
AS OF 25 Mar 2025Consolidated vehicle sales are expected to decline by less than 1% YoY, unchanged from last quarter but modestly below its initial FY25 expectation for a modest sales increase of less than 1%. While management affirmed its vehicle sales forecast, it changed the regional composition of sales by boosting its projected sales in North America and Europe while lowering its forecast for Japan, Asia, and other regions.
The company raised its FY25 revenue forecast by 2% from ¥46 tn to ¥47 tn based on the regional shift in expected sales and currency changes. Management also raised its FY25 consolidated operating income forecast to ¥4.7 tn, up 9% compared to its previous forecast of ¥4.3 tn. The higher guidance is based primarily on currency impacts (+7%), especially transactional currency impacts on exports to the US, lower material costs (+3%), and marketing efforts (+4%). These benefits are expected to be partially offset by higher expenses (-2%) and other items (-3%), including the Hino Motors certification debacle.
Key Metric
AS OF 25 Mar 2025| $ mn | FY21 | FY22 | FY23 | FY24 | F3Q25 |
|---|---|---|---|---|---|
| Total Company Earning Assets | 116,546 | 117,659 | 120,018 | 129,707 | 133,925 |
| Cash and Investments | 8,195 | 7,670 | 6,398 | 8,570 | 8,284 |
| Total Liquidity | 35,895 | 36,070 | 33,498 | 37,570 | 36,984 |
| Unsecured Debt | 85,513 | 82,288 | 78,949 | 88,083 | 89,994 |
| Secured Debt | 24,212 | 26,864 | 32,736 | 34,337 | 35,425 |
| Total Debt | 109,725 | 109,152 | 111,685 | 122,420 | 125,328 |
| Allowance % Retail Rece. | 1.64% | 1.66% | 1.83% | 1.81% | 1.80% |
| Allowance / Net Charge-offs | 4.50x | 6.68x | 3.03x | 2.32x | 2.02x |
| Net Charge-offs % Avg. Receivable | 0.39% | 0.26% | 0.63% | 0.82% | 0.89% |
| 30+ Day Delinquency Rate | 1.2% | 1.8% | 2.3% | 2.6% | 2.9% |
CreditSight View Comment
AS OF 14 Apr 2025We upgrade our recommendation on notes of Toyota Motor Co. and Toyota Motor Credit Corporation to Market perform from Underperform based primarily on relative value and our view that the company is positioned to withstand headwinds related to recently enacted US auto import tariffs within the context of its current credit rating despite the profit headwind caused by the tariffs.
Recommendation Reviewed: April 14, 2025
Recommendation Changed: April 14, 2025
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International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 25 Mar 2025Toyota is back on the path to normalized production schedules following its vehicle certification challenges in Japan during 1H25 that disrupted production of certain models. The company expects 10 mn units of retail sales in FY25, which would enable it to retain its place as the leading global automaker by volume. Toyota expects sales of its hybrid electric vehicles (HEVs) to account for 46% of retail sales this year, up from 37% in FY24, which is beneficial to customers and the company alike as management claims its HEVs are more profitable than its ICE vehicles. While Toyota was late to the BEV party and BEVs account for a paltry 1% of its retail sales, it has made significant BEV investments that will support the rollout of new BEV models and volumes over the next couple years.
Business Description
AS OF 25 Mar 2025- Toyota Motor Corp. (TMC) engages in the manufacture and sale of motor vehicles and parts. It operates through the following segments: Automotive, Financial Services, and All Other. The Automotive segment designs, manufactures, assembles and sells passenger cars, minivans, trucks, and related vehicle parts and accessories. Toyota is also involved in the development of intelligent transport systems. The Financial Services segment offers purchase or lease financing to Toyota vehicle dealers and customers. It also provides retail leasing through lease contracts purchased by dealers. The company was founded by Kiichiro Toyoda on August 28, 1937, and is headquartered in Toyota, Japan.
- Toyota Financial Services Corporation (TFSC), a wholly owned subsidiary of TMC, oversees the management of Toyota's finance companies worldwide. Toyota Motor Credit Corporation (TMCC) is the company’s principal financial services subsidiary in the United States. Under terms of the credit support agreement between TFSC and TMCC, TFSC agrees to: (1) maintain 100% ownership of TMCC; (2) cause TMCC and its subsidiaries to have a tangible net worth of at least $100,000; (3) make sufficient funds available to TMCC so that it will be able to service the obligations arising out of its own bonds, debentures, notes and other investment securities and commercial paper. The terms of the credit support agreement between TMC and TFSC are very similar to the terms of the TFSC and TMCC credit support agreement.
Risk & Catalysts
AS OF 25 Mar 2025Consolidated vehicle sales are expected to decline by less than 1% YoY, unchanged from last quarter but modestly below its initial FY25 expectation for a modest sales increase of less than 1%. While management affirmed its vehicle sales forecast, it changed the regional composition of sales by boosting its projected sales in North America and Europe while lowering its forecast for Japan, Asia, and other regions.
The company raised its FY25 revenue forecast by 2% from ¥46 tn to ¥47 tn based on the regional shift in expected sales and currency changes. Management also raised its FY25 consolidated operating income forecast to ¥4.7 tn, up 9% compared to its previous forecast of ¥4.3 tn. The higher guidance is based primarily on currency impacts (+7%), especially transactional currency impacts on exports to the US, lower material costs (+3%), and marketing efforts (+4%). These benefits are expected to be partially offset by higher expenses (-2%) and other items (-3%), including the Hino Motors certification debacle.
Key Metric
AS OF 25 Mar 2025| ¥ bn | FY21 | FY22 | FY23 | FY24 | LTM F3Q25 |
|---|---|---|---|---|---|
| Automotive Revenue | 24,652 | 28,606 | 33,777 | 41,081 | 42,191 |
| EBIT | 1,778 | 2,519 | 2,486 | 4,890 | 4,092 |
| EBIT Margin | 6.5% | 8.0% | 6.7% | 10.8% | 8.4% |
| EBITDA | 2,654 | 3,526 | 3,671 | 6,139 | 5,459 |
| EBITDA Margin | 9.8% | 11.2% | 9.9% | 13.6% | 11.1% |
| Total Liquidity | 11,557 | 15,864 | 10,090 | 12,401 | n/m |
| Net Debt | 597 | (1,719) | (2,825) | (4,025) | (4,025) |
| Total Debt | 3,872 | 2,580 | 2,724 | 2,868 | 2,868 |
| Gross Leverage | 1.5x | 0.7x | 0.7x | 0.5x | 0.5x |
| Net Leverage | 0.2x | -0.5x | -0.8x | -0.7x | -0.7x |
CreditSight View Comment
AS OF 01 May 2025We upgrade our recommendation on notes of Toyota Motor Co. and Toyota Motor Credit Corporation to Market perform from Underperform based primarily on relative value and our view that the company is positioned to withstand headwinds related to recently enacted US auto import tariffs within the context of its current credit rating despite the profit headwind caused by the tariffs.
Recommendation Reviewed: May 01, 2025
Recommendation Changed: April 14, 2025
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International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Search topics about wealth insights and investments.SM Investments Corporation
- Sector: Banking and Real EstateRetail
- Sub Sector: Diversified Conglomerate
- Country: Philippines
- Bond: SMPM 5.375 29
- Indicative Yield-to-Maturity (YTM): 5.101%
- Credit Rating : Unrated
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Our View
AS OF 20 Mar 2025Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 19 Mar 2025Mizuho has emerged as a significantly stronger and more capable institution than it was a decade ago.
Following the RBS North America business acquisition in 2015, which significantly improved its heft and offerings, Mizuho largely shied away from making investments in its businesses due to low capital levels and a focus on reducing expenses; that has changed over the past couple of years (Greenhill/Rakuten); separately, capital levels are now stronger than SMFG’s.
As one of the three megabanks, Mizuho’s credit standing benefits from a strong expectation of government support, if needed.
Business Description
AS OF 19 Mar 2025- Mizuho is the third largest by asset size among Japan's three megabanks. It was formed in 2000 through the merger of the former "City" banks, Fuji and Dai-Ichi Kangyo, and the Industrial Bank of Japan, a provider of long-term industrial credit financed by bond issues.
- Its main units are Mizuho Bank and Mizuho Trust & Banking (focusing on asset management and related services). The group's other main business is Mizuho Securities, a leading player in debt capital markets in Japan and the US.
- It expanded in North America in 2015 by acquiring assets and staff from RBS and has successfully captured more markets and commercial banking business in conjunction with its securities arm. It also acquired Greenhill, a boutique M&A firm, in 2023, and owns ~50% of Rakuten Securities and 15% of Rakuten Cards.
- Mizuho is less diversified than its megabank peers by product segment, although its securities arm is large.
Risk & Catalysts
AS OF 19 Mar 2025Its plans to recycle assets out of Japanese mortgages and low profitability assets into the Americas is sensible.
A series of Japan IT system failures in 2021-22 was a distraction, but has fortunately not recurred recently.
Asset quality is a key strength (but its international loan margins are also lower as a consequence) and credit costs are much lower than its peer megabanks, in part due to not owning a large Japanese personal unsecured loans business.
The buffer between its CET1 ratio (fully Basel III compliant and ex-security gains) and the 8% regulatory minimum has improved from 170 bp a year ago to 240 bp as of Dec-24.
Key Metric
AS OF 19 Mar 2025| JPY bn | FY21 | FY22 | FY23 | 3Q23 | 3Q24 |
|---|---|---|---|---|---|
| Net Interest Revenue/Ave Assets | 0.44% | 0.41% | 0.35% | 0.35% | 0.36% |
| Operating Income/Average Assets | 1.01% | 0.96% | 1.05% | 1.05% | 1.11% |
| Operating Expense/Operating Income | 62% | 63% | 62% | 59% | 60% |
| Pre-Impairment Operating Profit / Average Assets | 0.38% | 0.34% | 0.40% | 0.43% | 0.45% |
| Loan impairment (charge) or reversal/ave. loans | (0.28%) | (0.10%) | (0.12%) | (0.02%) | 0.05% |
| ROAA | 0.24% | 0.23% | 0.26% | 0.34% | 0.42% |
| ROAE | 5.8% | 6.1% | 7.0% | 9.0% | 11.0% |
| CET1 Ratio excl. unrealised securities gains in AOCI | 11.5% | 11.3% | 11.8% | n/a | n/a |
CreditSight View Comment
AS OF 04 Feb 2025Mizuho historically trailed its peers on profitability and capital (which in turn limited franchise investments), as the merger that formed it included IBJ, a large wholesale bank with thin margins. Credit costs related to Russia in 4Q21 + Japan corps in 1Q22 affected results but were better subsequently. Previous issues with its Japan IT system have not resurfaced. CET1 capital has a decent 2.5% buffer. Mizuho was the improved megabank over FY20-21 and again more recently. FY22 net income declined, but FY23 and 9M24 have seen good net income jumps, helped by better trading revenues and low credit costs. It has finally restarted investments in new product/M&A. Govt. support is assured. We see 10-15 bp of upside from current levels, and an improving credit trajectory.
Recommendation Reviewed: February 04, 2025
Recommendation Changed: January 27, 2025
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International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Search topics about wealth insights and investments.Mexico
- Bond: Mex 4.125 26
- Indicative Yield-to-Maturity (YTM): 4.365%
- Credit Rating : BBB
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Country Overview
AS OF 19 Mar 2025- Mexico, the second largest economy in Latin America and among the world’s top 15, generated an estimated GDP of USD 1.79 trillion in 2023. (World Bank, 2023).
- While the World Bank classifies Mexico as an “Upper-Middle Income, Developing” economy with a per capita GDP of USD 24,766.6 (2023), MSCI’s 2024 Market Classification Review designates it as an Emerging Market, indicating that it is adequate but still developing.
- Though a net importer, Mexico boasts a robust export sector, primarily in petroleum, digital processing units, and automobiles, which generated approximately USD 82.8 million in revenue (WITS, 2022). This economic activity is largely fueled by the services sector, contributing roughly 60% to GDP, and an increasingly skilled, yet affordable, workforce (Global Finance Magazine, 2024).
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Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group