Honda Earnings: Chip Shortage Recovery Drives Strong Growth, Stock to Split in October

Honda started fiscal 2024 with a strong first quarter aided by chip shortage recovery in the auto segment. We are raising our U.S. dollar fair value estimate by $2 to $36 per share and our yen per share fair value estimate by JPY 100 to JPY 5,100. The increase reflects the time value of money, higher revenue for fiscal 2024 than previously modeled, and modeling a slightly weaker yen against the dollar helping profits over our five-year explicit forecast period. Revenue increased year over year by 16.5% on a constant currency basis and by 20.8% factoring in a weaker yen against the dollar (JPY 137 versus JPY 130) and other major currencies. Motorcycles and autos both posted robust double-digit growth, but a 25.8% constant currency increase in autos led the way. Consolidated auto volume rose 19.7% to 633,000, while total auto volume, including joint ventures, grew 10.6% to 901,000. Motorcycle wholesales saw a pullback in India from scarcity of semiconductors and a recession in Vietnam, but Thailand and the key market of Indonesia performed well, with Indonesia's wholesale volume up 63% on better production.