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Stock Report | September 24, 2016 | NYS Symbol: HMC | HMC is in the S&P ADR Index

Honda Motor Co. Ltd.


S&P Capital IQ
Recommendation
HOLD ★★★★★ Price 12-Mo. Target Price
$29.49 (as of Sep 23, 2016 4:00 PM ET) $30.00
Report Currency
USD
S&P Capital IQ Equity Analyst Tzyy Loon Ng

GICS Sector Consumer Discretionary Summary This company is one of the world's largest automobile manufacturers, and is the
Sub-Industry Automobile Manufacturers largest manufacturer of motorcycles.

Key Stock Statistics (Source S&P Capital IQ, Vickers, company reports)

52-Wk Range $33.87– 24.03 S&P Oper. EPS 2017E 2.24 Market Capitalization(B) $53.149 Beta 1.01
Trailing 12-Month EPS $1.59 S&P Oper. EPS 2018E 2.59 Yield (%) 2.37 S&P 3-Yr. Proj. EPS CAGR(%) 5
Trailing 12-Month P/E 18.6 P/E on S&P Oper. EPS 2017E 13.2 Dividend Rate/Share $0.70 S&P Quality Ranking NR
$10K Invested 5 Yrs Ago $10,144 Common Shares Outstg. (M) 1,802.3 Institutional Ownership (%) 3

Price Performance Analyst's Risk Assessment


30-Week Mov. Avg. 10-Week Mov. Avg. GAAP Earnings vs. Previous Year Volume Above Avg. STARS
LOW MEDIUM HIGH
12-Mo. Target Price Relative Strength Up Down No Change Below Avg.
Our risk assessment reflects the highly cyclical
nature of the company's markets, as well as our
40
view of intensifying competition and vulnerability
to unfavorable exchange rate swings. Offsetting
Share Price

35
this, Honda has displayed generally consistent
30 growth in international sales in recent years.

25
Revenue/Earnings Data
Revenue (Million $)
Volume(Mil.)

18
6
13 1Q 2Q 3Q 4Q Year
4 2017 32,173 -- -- -- --
2 2016 30,537 29,646 29,790 31,738 121,794
0
2015 29,270 28,990 28,744 28,141 115,209
5 4 3 2014 28,693 29,234 30,087 30,137 118,271
1 2013 30,424 28,890 29,871 29,743 119,354
OND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SOND J FMAM J J A SON 2012 21,023 24,277 25,125 30,359 100,746
2012 2013 2014 2015 2016
Earnings Per ADS ($)
Past performance is not an indication of future performance and should not be relied upon as such.
2017 0.90 -- -- -- E2.24
Analysis prepared by Equity Analyst Tzyy Loon Ng on Aug 02, 2016 09:55 AM, when the stock traded at $27.29. 2016 0.85 0.58 0.57 -0.45 1.60
Highlights Investment Rationale/Risk 2015 0.80 0.76 0.66 0.46 --
2014 0.69 0.68 0.89 0.92 3.18
➤ We estimate a 5.6% lower total revenues in yen ➤ We see Honda benefiting from rising non- 2013 0.91 0.58 0.53 0.46 2.46
in FY 17 (Mar.), boosted by higher global pro- Japan Asia sales. However, we think safety and 2012 0.22 0.43 0.34 0.50 1.49
duction but more than offset by the significant quality concerns, particularly on the Takata Fiscal year ended Mar. 31. Next earnings report expected: Early
yen strengthening against major currencies. supplied airbags will pressure Honda's near- November. EPS Estimates based on S&P Capital IQ Operating
Earnings; historical GAAP earnings are as reported in Company
We see growth in demand in most regions, but term earnings. Longer term this pressure reports.
some regions face challenges. We think its should abate as Honda will drop Takata as a
strategic move to sell more motorcycles in Asia supplier. In addition to strengthening global au- Dividend Data
will help to cushion the falling sales in other tomotive demand, we see Honda benefiting
Amount Date Ex-Div. Stk. of Payment
emerging markets (e.g. Brazil). We think the from a focus on more fuel-efficient vehicles. ($) Decl. Date Record Date
safety and quality concerns, particularly on the ➤ Risks to our recommendation and target price 0.191 -- -- Jun 29 Sep 1 '16
Takata supplied airbags, will pressure Honda's include slower-than-expected unit sales in the 0.155 -- -- Sep 29 Dec 7 '15
earnings growth in the near term. Longer term, U.S. and elsewhere on any weakening of con- 0.168 -- -- Dec 30 Mar 4 '16
we think this will abate as Honda has decided sumer spending, a larger-than-projected in- 0.184 -- -- Mar 30 Jun 24 '16
to drop Takata as its airbag supplier for its fu- crease in raw material costs and a stronger- Dividends have been paid since 1949. Source: Company reports.
ture car models. than-anticipated Japanese yen. Past performance is not an indication of future performance and
➤ We do not expect Honda s net profit margin to ➤ Our 12-month target price of $30 is based on a should not be relied upon as such.
recover to the FY2014-level, despite its continu- multiple of 13.4X our FY 17 earnings per ADS es-
ous effort to cut manufacturing cost and launch timate of $2.24. This is in line with its three-year
more high-end models, partly due to the recall year-end average multiple. We believe the pre-
costs. We also think the rising competition in mium to the peer average of 7.8X is justified by
Japan and Asia markets may exert pressure on its diversified (more than 25% of revenues are
Honda s pricing power, especially with a from non-car segments) revenue base and its
stronger JPY ahead. stable EBITDA margin over the past three years
➤ We project earnings per ADS of $2.24 for FY 17 (8.0% to 9.9%).
and $2.59 for FY 18, translated at the recent yen
rate of JPY 101.32 per dollar.

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Unless otherwise indicated, there is no intention to update this document.
Stock Report | September 24, 2016 | NYS Symbol: HMC

Honda Motor Co. Ltd.


Business Summary August 02, 2016 Corporate Information

CORPORATE OVERVIEW. Honda Motor Co. (HMC) is a leading manufacturer of automobiles, motorcycles, Investor Contact
and power products. The company aims to create value by offering high-end innovative products, estab- K. Amemiya (81-3-3423-1111)
lishing advanced customer relations activities, and building a foundation for new business projects.

Each ADS represents one common share of HMC. Office


No. 1-1, Minami-Aoyama 2-chome, Minato-ku,
Automobile sales accounted for 72% of total segment sales in FY 15 (Mar.), while motorcycle sales con- Tokyo, Japan 107-8556.
tributed 14%. Worldwide automobile unit sales advanced 0.5% in the fiscal year, while overall motorcycle
unit sales climbed 3.8%. Telephone
81 3 3423 1111.
Other businesses, including power products and financial services, together accounted for about 14% of
net sales in FY 15. Power product unit sales fell 0.6%, despite increases in Japan and Europe. Revenues Fax
from financial services fell 15%. 81 3 5412 1515.

The company's production operations are conducted primarily in 30 separate factories, four of which are Website
located in Japan. Principal overseas manufacturing facilities are located in the U.S., Canada, the U.K., http://www.honda.com
France, Italy, Spain, India, Pakistan, the Philippines, Thailand, Vietnam, Brazil and Mexico. HMC sells its
products in most countries worldwide. In FY 15, 85% of net sales were from outside Japan.
Officers
CORPORATE STRATEGY. In July, the new president and CEO, Takahiro Hachigo, expressed two themes
that the new "Team Honda" would act upon: First, advancement of the six-region global operation struc- CEO & Pres
ture. Second, continuous development of challenging products unique to Honda and delivering them to our T. Hachigo
customers around the world.
CFO
We expect it to continue to focus on environmental and energy-related issues. K. Takeuchi
MARKET PROFILE. We estimate 2016 U.S. light vehicle sales to rise 1.0% to 17.6 million units. We expect
gains in most other regions as well. Rising prosperity in emerging markets, led by China, should drive glob-
Board Members
al demand growth, and European demand should rise, partly offset by declines in Russia and in some
S. Aoyama T. Hachigo
emerging markets. We think higher volume in the U.S. and abroad versus 2015 will help corporate profits
M. Igarashi T. Ito
and cash flows. Positive factors we see in the U.S. include pent-up demand and widely available access to
consumer credit. The average vehicle is now above 11 years old, an industry record. We believe lower H. Kunii S. Kuraishi
gasoline prices are a positive for sales. Y. Matsumoto O. Motoki
K. Odaka T. Sekiguchi
IMPACT OF MAJOR DEVELOPMENTS. The March 2011 major earthquake in Japan, combined with the K. Takeuchi Y. Yamane
tsunami and nuclear plant issues there, disrupted production at automakers and suppliers based in Japan,
as well as their operations abroad.
Domicile
In July 2015, Honda maintained its FY 16 financial forecasts, after earlier this year voluntarily switching to Japan
report under IFRS accounting standards for the year. It expects U.S. GAAP revenues of 13.85 trillion yen
(14.5 trillion yen using IFRS), operating profit of 660 million yen (685 million yen), profit before taxes of 650 Founded
billion (805 billion), and net income and earnings per share of 525 billion yen and 291.3, respectively, using 1946
both accounting measures.
Employees
In January, Honda lowered its IFRS revenues forecast to 14.55 billion yen, but left its profit metrics un- 208,399
changed. It had increased the revenues forecast to 14.6 billion in November.
Stockholders
FINANCIAL TRENDS. In FY 15, HMC's capital expenditures totaled about 723 billion yen, with depreciation NA
at 490 billion yen.

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Stock Report | September 24, 2016 | NYS Symbol: HMC

Honda Motor Co. Ltd.


Quantitative Evaluations Expanded Ratio Analysis

S&P Capital IQ 5 1 2 3 4 5 2016 2015 2014 2013


Fair Value LOWEST HIGHEST Price/Sales 0.44 0.50 0.45 0.62
Rank Based on S&P Capital IQ's proprietary quantitative model, stocks Price/EBITDA 5.48 4.07 4.49 7.36
are ranked from most overvalued (1) to most undervalued (5). Price/Pretax Income 10.03 7.74 6.18 10.79
P/E Ratio 15.68 11.16 8.75 15.71
Fair Value $60.10 Analysis of the stock's current worth, based on S&P Capital IQ's Avg. Diluted Shares Outstg (M) 1,802.3 1,802.3 1,802.3 1,802.3
proprietary quantitative model suggests that HMC is Undervalued
Calculation by $30.61 or 103.8%. Figures based on calendar year-end price

Investability 41 Key Growth Rates and Averages


Quotient LOWEST = 1 HIGHEST = 100
Percentile HMC scored lower than 59% of all companies for which an S&P Past Growth Rate (%) 1 Year 3 Years 5 Years 9 Years
Capital IQ Report is available.
Sales 5.72 0.35 3.38 2.18
Net Income -34.25 -11.07 -3.53 2.10
Volatility LOW AVERAGE HIGH
Ratio Analysis (Annual Avg.)
Technical NEUTRAL Since September, 2016, the technical indicators for HMC have Net Margin (%) 2.78 4.13 3.83 3.89
been NEUTRAL. % LT Debt to Capitalization 27.02 32.08 32.46 30.58
Evaluation
Return on Equity (%) 5.67 8.57 7.97 8.46
Insider Activity NA UNFAVORABLE NEUTRAL FAVORABLE

For further clarification on the terms used in this report, please visit www.spcapitaliq.com/stockreportguide

Company Financials Fiscal Year Ended Mar. 31

Per ADS Data ($) 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Tangible Book Value 32.53 32.10 31.89 29.68 29.69 29.71 25.45 22.36 25.08 20.80
Cash Flow 4.94 7.54 7.78 6.59 3.82 5.92 3.98 4.30 6.17 8.96
Earnings 1.60 2.64 3.18 2.46 1.49 3.46 1.59 0.76 3.31 2.77
Dividends 0.64 0.54 0.69 0.63 NA 0.60 0.25 0.68 0.74 0.51
Payout Ratio 40% 20% 22% 26% Nil 17% 16% 89% 22% 18%
Calendar Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
Prices:High 36.44 41.38 42.96 39.35 44.56 39.69 34.52 36.40 40.82 39.87
Prices:Low 28.61 28.83 35.15 28.50 27.52 28.33 20.28 17.35 31.29 27.10
P/E Ratio:High 23 16 14 16 30 11 22 48 12 14
P/E Ratio:Low 18 11 11 12 18 8 13 23 9 10

Income Statement Analysis (Million $)


Revenue 121,794 115,209 118,271 119,354 100,746 104,422 92,433 100,817 120,209 94,086
Operating Income 9,691 14,131 11,860 10,121 9,397 11,313 8,254 8,331 14,737 10,382
Depreciation 5,511 8,434 7,937 7,135 4,069 4,107 4,328 6,421 5,192 3,152
Interest Expense 151 166 232 108 132 99.0 135 227 167 110
Pretax Income 5,301 7,435 8,603 6,907 4,535 9,001 4,627 2,626 1,016 7,606
Effective Tax Rate 36.1% 30.7% 29.3% 31.3% 37.9% 26.9% 34.2% 42.1% 38.2% 31.7%
Net Income 3,390 5,156 6,080 4,744 2,815 6,584 2,892 1,380 6,009 5,026

Balance Sheet & Other Financial Data (Million $)


Cash 15,641 12,231 11,350 12,808 15,156 15,450 11,981 7,043 10,525 8,024
Total Assets 162,236 150,746 151,684 144,793 143,166 139,587 124,408 119,684 126,345 102,143
Long Term Debt 33,255 32,808 31,402 28,786 27,161 24,649 24,745 19,571 18,394 16,172
Total Debt NA NA NA NA NA 49,466 43,880 46,754 44,014 33,495
Common Equity 60,175 56,098 57,471 53,493 53,503 53,683 46,308 40,580 45,511 38,040
Capital Expenditures 7,532 12,040 12,200 10,170 13,137 13,475 10,014 13,198 6,692 5,074
Cash Flow 8,901 13,590 14,016 11,879 6,884 10,691 7,220 7,801 11,201 8,179
% Return on Assets 2.2 3.4 4.1 3.3 2.0 5.0 2.4 1.1 4.9 5.2
% Return on Equity 5.7 9.1 11.0 8.9 5.3 13.2 6.7 3.2 13.3 13.8
% Long Term Debt of Capitalization 27.0 35.3 33.9 33.6 32.4 26.5 30.9 27.5 28.2 29.3

Data as originally reported in Company reports.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under
Review.

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Stock Report | September 24, 2016 | NYS Symbol: HMC

Honda Motor Co. Ltd.


Sub-Industry Outlook Industry Performance
We find valuations among automobile refreshed pickup trucks combined with improved GICS Sector: Consumer Discretionary
manufacturers sub-industry for the next 12 months construction, housing and contractor activity should Sub-Industry: Automobile Manufacturers
to be attractive, supported by our positive view of boost overall truck sales. Luxury vehicle sales in the
global industry fundamentals. In 2016, we see U.S. U.S., which were also restrained by economic Based on S&P 1500 Indexes
automotive demand trending slightly higher weakness, should show improvement, in our view, Five-Year market price performance through
year-over-year. While we expect to see uneven as wealthy consumers become more confident. Sep 24, 2016
geographic progress, we look for global demand to Luxury sales should be strong in China.
rise again. Also, despite the risks we perceive, we S&P 1500 Sector Sub-Industry
forecast steady improvement overall. Europe has We believe GM's and Chrysler's respective 160%
pressured General Motors and Ford in the troubled bankruptcy filings allowed the automakers to shed
region, but the companies have shown progress, billions of dollars in liabilities and lower their
and we see higher industry sales volume there after operating costs. Overall, we believe this makes the
years of declines. Russia and parts of South companies more cost competitive and focused, but 110%
America still look likely to be challenged areas, with they still face competitive challenges. Chrysler has
declines, and the strong dollar is hurting profit and merged with Fiat SpA of Italy, as Fiat Chrysler

% Change
sales translation. Automotive NV.
60%

We estimate 2016 U.S. light vehicle sales will rise Year to date through August 31, the S&P Automobile
slightly to a cyclical peak of 17.4 million, before a Manufacturers Index was 6.1% lower, versus a 6.8%
softening 1.5% to 2% in 2017. For 2016, we expect increase for S&P 1500 Index. In 2015, the
gains in most other regions too. Rising prosperity in sub-industry index was down 5.9%, compared to a 10%

emerging markets, led by China (even as growth 1.0% decline for the S&P 1500.
there slows), should drive global demand growth,
and European demand should rise, partly offset by --Efraim Levy, CFA
declines in some emerging markets. We think higher -40%

volume in the U.S. and abroad will help corporate


profits and cash flows. Recall costs, should be
reduced, enhancing profits, although currency
swings impact companies' profitability. European -90%

difficulties should be partly offsetting factors. 2011 2012 2013 2014 2015 2016

Positive factors we see in the U.S. include widely


NOTE: All Sector & Sub-Industry information is based on the
available access to consumer credit, rising Global Industry Classification Standard (GICS)
consumer confidence and employment, a strong
stock market and lower gas prices. The average Past performance is not an indication of future performance
vehicle is now about 11.5 years old, an industry and should not be relied upon as such.
record.

We think lower gasoline prices and economic


growth will support expansion in the highly
profitable light truck segment. Also, new and

Sub-Industry : Automobile Manufacturers Peer Group*: Automakers


Stk.Mkt. Recent 52 Fair S&P Return on LTD to
Stock Cap. Stock Week Yield P/E Value Quality IQ Revenue Cap
Peer Group Symbol (Mil. $) Price($) High/Low($) Beta (%) Ratio Calc.($) Ranking %ile (%) (%)
Honda Motor ADS HMC 53,149 29.49 33.87/24.03 1.01 2.4 19 60.10 NR 41 2.8 27.0
Daimler AG DDAIF 76,294 71.30 89.65/56.56 1.69 Nil 9 92.50 NR 26 5.8 51.8
Ford Motor F 47,950 12.17 15.84/11.02 1.53 4.9 6 12.50 B 93 4.9 NA
Fuji Heavy Ind ADS FUJHY 30,060 77.04 84.85/61.09 0.76 2.9 8 NA NR 53 13.5 6.2
General Motors GM 49,984 32.12 36.88/26.69 1.72 4.7 4 32.30 NR 58 6.4 15.2
Nissan Motor Co ADS NSANY 41,345 20.31 21.92/16.57 0.92 3.1 10 35.80 NR 23 4.5 4.8
Tesla Motors TSLA 26,090 207.45 269.34/141.05 0.62 Nil NM 116.30 NR 70 NM 53.6
Toyota Motor ADS TM 177,155 117.66 127.28/97.80 0.62 2.7 10 124.80 NR 63 8.6 2.2
Volkswagen ADS VLKAY 72,537 28.94 32.18/22.71 1.68 0.1 NM NA NR 21 NM NA

NA-Not Available NM-Not Meaningful NR-Not Rated. *For Peer Groups with more than 15 companies or stocks, selection of issues is based on market capitalization.

Redistribution or reproduction is prohibited without written permission.


Stock Report | September 24, 2016 | NYS Symbol: HMC

Honda Motor Co. Ltd.


S&P Capital IQ Analyst Research Notes and other Company News
HONDA MOTOR CORP. (HMC 34.75***): We lower our 12-month target $2 to $35,
or 14.6X our FY 16 earnings per ADS estimate of $2.40 (JPY 298 per share), cut
August 2, 2016
$0.10. This compares to the stock's three year P/E multiple average of 14.0X and
09:48 am ET ... S&P GLOBAL MAINTAINS HOLD OPINION ON ADSS OF HONDA
the peer average of 13.8X. We reduce our FY 17 earnings per ADS estimate $0.16
MOTOR CO. (HMC 27.29***): We raise our 12-month target by $1 to $30. We apply
to $2.77. We think the weak yen will continue to boost Honda's overseas sales in
a 13.4X P/E multiple to FY 17's forecast, in line with to its 3-year P/E multiple
near-term and offset the declining sales in its domestic market. However, safety
average of 13.4X. We think HMC warrants an above-peer average (7.8X), due to
and quality concerns should pressure profit growth. HMC posts Jun-Q earnings
its diversified (non-car) revenue base and its relatively stable EBITDA margin. We
per ADS of JPY 103.22 ($0.85), vs. JPY86.34, above our estimates. /Tzyy Loon Ng,
increase our FY 17 (Mar.) earnings per ADS estimate by $0.16 to $2.24, and FY
/E. Levy-CFA
'18's by $0.28 to $2.59. We think the strong yen will hurt Honda's overseas sales.
HMC posts Jun-Q earnings per per ADS of JPY96.93 ($0.94) vs. JPY6.29, above the
Capital IQ consensus, despite unfavorable FX. /Tzyy Loon Ng, /E. Levy-CFA April 30, 2015
03:16 pm ET ... S&P CAPITAL IQ REITERATES HOLD OPINION ON ADSS OF
HONDA MOTOR CO. LTD. (HMC 33.625***): We raise our 12-mo. target $5 to $37,
August 2, 2016
on historical P/E analysis. HMC posts Mar-Q earnings per ADS of JPY 54.29
09:48 am ET ... S&P GLOBAL MAINTAINS HOLD OPINION ON ADSS OF HONDA
($0.45), vs. JPY40.32, slightly below estimates. We think the recent safety
MOTOR CO. (HMC 27.29***): We raise our 12-month target by $1 to $30. We apply
concerns may dampen its attractiveness to consumers and translate into weaker
a 13.4X P/E multiple to FY 17's forecast, in line with to its 3-year P/E multiple
sales and pricing power. Hence, we cut our FY16 (Mar.) EPS forecast to JPY298
average of 13.4X. We think HMC warrants an above-peer average (7.8X), due to
($2.50) from JPY346. Still, we think operating profit margin should stabilize as the
its diversified (non-car) revenue base and its relatively stable EBITDA margin. We
earnings impact from vehicle recalls should minimize in the coming quarters.
increase our FY 17 (Mar.) earnings per ADS estimate by $0.16 to $2.24, and FY
Longer-term, we see better earnings prospects on rising industry volume. /Tzyy
'18's by $0.28 to $2.59. We think the strong yen will hurt Honda's overseas sales.
Loon Ng, /E. Levy-CFA
HMC posts Jun-Q earnings per per ADS of JPY96.93 ($0.94) vs. JPY6.29, above the
Capital IQ consensus, despite unfavorable FX. /Tzyy Loon Ng, /E. Levy-CFA

May 13, 2016


01:00 pm ET ... S&P GLOBAL MAINTAINS HOLD OPINION ON ADSS OF HONDA
MOTOR (HMC 27.20***): We lower our FY 17 (Mar.) earnings per ADS estimate by
$0.73 to $2.08, and set FY '18's at $2.31. We apply a 14X P/E multiple to FY 17's
forecast, compared to the stock's 3-year P/E multiple average of 14.0X. We think
the multiple is justified by its relatively stable EBITDA margin. We think it should
retain an above peer average (7.6X), due to its diversified (non-car) revenue base.
We think the strong yen will hurt Honda's overseas sales. HMC posts Mar-Q loss
per per ADS of JPY51.85 ($0.45) vs. profit per ADS of PY45.45, below forecasts,
hurt by airbag recall costs and FX. /Tzyy Loon Ng, /E. Levy-CFA

April 18, 2016


09:44 am ET ... S&P CAPITAL IQ MAINTAINS BUY OPINION ON ADSS OF TOYOTA
MOTOR (TM 103.68****): The recent severe earthquakes in Japan will dent
current quarter profits. The earthquakes triggered parts shortages and resulted in
suspension of vehicle assembly lines operations at Toyota and some of it its
affiliated Toyota Group companies. The financial impact will depend in part on the
duration (currently through this week) and amount of lost production, as well as
how much production can be made up later without impacting sales volume.
Toyota has a higher proportion of production in Japan than key peers. Honda
(HMC 27 ***) also suspended some production operations. /E. Levy-CFA

January 29, 2016


09:59 am ET ... S&P CAPITAL IQ MAINTAINS HOLD OPINION ON ADSS OF
HONDA MOTOR CORP. (HMC 27.35***): We lower our 12-month target by $6, to
$29, or 10.3X our FY 17 (Mar.) earnings per ADS estimate of $2.81 (JPY343.46 per
share), cut $0.01 today. This compares to the stock's three year P/E multiple
average of 11.0X, due to reduced growth prospects, in our view. However, we
think it should retain an above peer average (7.9X), due to its diversified (non-car)
revenue base. We lower our FY 16 earnings per ADS estimate by $0.07 to $2.38
(JPY 289.14 per share). We think the weak yen will help Honda's overseas sales.
HMC posts Dec-Q earnings per ADS of JPY 68.91 ($0.57), vs. JPY84.56. /Tzyy Loon
Ng, /E. Levy-CFA

November 4, 2015
12:13 pm ET ... S&P CAPITAL IQ MAINTAINS HOLD OPINION ON ADSS OF
HONDA MOTOR CO. LTD. (HMC 32.13***): We raise our FY 16 earnings per ADS
estimate by $0.05 to $2.45 (JPY 298 per share), and FY 17's by $0.05 to $2.82. We
keep our 12-month target price of $35, or 14.4X our FY 16 projection. This
compares to the stock's three year P/E multiple average of 14.5X and the peer
average of 11.3X. We think the weak yen will boost Honda's overseas sales, but a
soft Japan market should partly offset. A shift to increased focus on emerging
markets should help motorcycle sales. HMC posts Sep-Q earnings per ADS of
JPY 70.88 ($0.58), vs. JPY66.32, below the Capital IQ consensus estimate. /Tzyy
Loon Ng, /E. Levy-CFA

August 3, 2015
11:24 am ET ... S&P CAPITAL IQ MAINTAINS HOLD OPINION ON ADSS OF

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Stock Report | September 24, 2016 | NYS Symbol: HMC

Honda Motor Co. Ltd.


Analysts' Recommendations Wall Street Consensus Opinion

Monthly Average Trend Buy Buy/Hold Hold Weak Hold Sell No Opinion HMC Trend HOLD
B BH H WH S

Wall Street Average Companies Offering Coverage


B
BofA Merrill Lynch
BH
Jefferies LLC
H
Morningstar Inc.
WH

Number of Analysts Following Stock

Stock Price ($ 000)


1000

1000

1000

1000
O N D J F M A M J J A S O N D J F M A M J J A S

2014 2015 2016

Of the total 3 companies following HMC, 3 analysts currently publish recommendations.

No. of % of Total 1 Mo. Prior 3 Mos. Prior


Recommendations
Buy 1 33 1 1
Buy/Hold 0 0 0 0
Hold 1 33 1 1
Weak Hold 1 33 1 1
Sell 0 0 0 0
No Opinion 0 0 0 0
Total 3 100 3 3
Wall Street Consensus Estimates Wall Street Consensus vs. Performance

For fiscal year 2017, analysts estimate that HMC


Estimates 2016 2017 2018 2016 Actual $1.6 will earn US$ 2.24. For fiscal year 2018, analysts
6 estimate that HMC's earnings per share will grow
by 16% to US$ 2.59.
4

0 M J J A S O N D J F M A M J J A S

2015 2016

Fiscal Years Avg Est. High Est. Low Est. # of Est. Est. P/E
2018 2.59 2.59 2.59 1 11.4
2017 2.24 2.24 2.24 1 13.2
2018 vs. 2017 16% 16% 16% 0% -14%

A company's earnings outlook plays a major part in any investment decision. S&P Capital IQ organizes the earnings estimates of over 2,300
Wall Street analysts, and provides their consensus of earnings over the next two years, as well as how those earnings estimates have
changed over time. Note that the information provided in relation to consensus estimates is not intended to predict actual results and should
not be taken as a reliable indicator of future performance.

Redistribution or reproduction is prohibited without written permission.


Stock Report | September 24, 2016 | NYS Symbol: HMC

Honda Motor Co. Ltd.

Glossary EBIT - Earnings Before Interest and Taxes


EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization
EPS - Earnings Per Share
S&P Capital IQ STARS EV - Enterprise Value
Since January 1, 1987, S&P Capital IQ Equity Research has ranked a universe of U.S. FCF - Free Cash Flow
common stocks, ADRs (American Depositary Receipts), and ADSs (American FFO - Funds From Operations
Depositary Shares) based on a given equity's potential for future performance. FY - Fiscal Year
Similarly, S&P Capital IQ Equity Research has ranked Asian and European equities P/E - Price/Earnings
since June 30, 2002. Under proprietary STARS (STock Appreciation Ranking System), P/NAV - Price to Net Asset Value
S&P Capital IQ equity analysts rank equities according to their individual forecast of an PEG Ratio - P/E-to-Growth Ratio
equity's future total return potential versus the expected total return of a relevant PV - Present Value
benchmark (e.g., a regional index (S&P Asia 50 Index, S&P Europe 350® Index or R&D - Research & Development
S&P 500® Index)), based on a 12-month time horizon. STARS was designed to meet ROCE - Return on Capital Employed
the needs of investors looking to put their investment decisions in perspective. Data ROE - Return on Equity
used to assist in determining the STARS ranking may be the result of the analyst's ROI - Return on Investment
own models as well as internal proprietary models resulting from dynamic data inputs. ROIC - Return on Invested Capital
ROA - Return on Assets
S&P Capital IQ Quality Ranking SG&A - Selling, General & Administrative Expenses
(also known as S&P Capital IQ Earnings & Dividend Rankings) - Growth and SOTP - Sum-of-The-Parts
stability of earnings and dividends are deemed key elements in establishing S&P WACC - Weighted Average Cost of Capital
Capital IQ's earnings and dividend rankings for common stocks, which are designed to
capsulize the nature of this record in a single symbol. It should be noted, however, that Dividends on American Depository Receipts (ADRs) and American
the process also takes into consideration certain adjustments and modifications Depository Shares (ADSs) are net of taxes (paid in the country of
deemed desirable in establishing such rankings. The final score for each stock is origin).
measured against a scoring matrix determined by analysis of the scores of a large and
representative sample of stocks. The range of scores in the array of this sample has
been aligned with the following ladder of rankings: S&P Capital IQ Qualitative Risk Assessment
Reflects an S&P Capital IQ equity analyst's view of a given company's operational risk,
A+ Highest B Below Average
or the risk of a firm's ability to continue as an ongoing concern. The S&P Capital IQ
A High B- Lower
Qualitative Risk Assessment is a relative ranking to the S&P U.S. STARS universe,
A- Above Average C Lowest
and should be reflective of risk factors related to a company's operations, as opposed
B+ Average D In Reorganization
to risk and volatility measures associated with share prices. For an ETF this reflects on
NR Not Ranked
a capitalization-weighted basis, the average qualitative risk assessment assigned to
holdings of the fund.
S&P Capital IQ EPS Estimates
S&P Capital IQ earnings per share (EPS) estimates reflect analyst projections of future
EPS from continuing operations, and generally exclude various items that are viewed
STARS Ranking system and definition:
as special, non-recurring, or extraordinary. Also, S&P Capital IQ EPS estimates reflect
★★★★★ 5-STARS (Strong Buy):
Total return is expected to outperform the total return of a relevant benchmark, by a
either forecasts of S&P Capital IQ equity analysts; or, the consensus (average) EPS
wide margin over the coming 12 months, with shares rising in price on an absolute
estimate, which are independently compiled by Capital IQ, a data provider to S&P
basis.
Capital IQ Equity Research. Among the items typically excluded from EPS estimates
are asset sale gains; impairment, restructuring or merger-related charges; legal and
★★★★★ 4-STARS (Buy):
Total return is expected to outperform the total return of a relevant benchmark over the
insurance settlements; in process research and development expenses; gains or
coming 12 months, with shares rising in price on an absolute basis.
losses on the extinguishment of debt; the cumulative effect of accounting changes;
and earnings related to operations that have been classified by the company as
★★★★★ 3-STARS (Hold):
Total return is expected to closely approximate the total return of a relevant
discontinued. The inclusion of some items, such as stock option expense and
benchmark over the coming 12 months, with shares generally rising in price on an
recurring types of other charges, may vary, and depend on such factors as industry
absolute basis.
practice, analyst judgment, and the extent to which some types of data is disclosed by
companies.
★★★★★ 2-STARS (Sell):
Total return is expected to underperform the total return of a relevant benchmark over
the coming 12 months, and the share price not anticipated to show a gain.
S&P Capital IQ Core Earnings ★★★★★1-STAR (Strong Sell):
S&P Capital IQ Core Earnings is a uniform methodology for adjusting operating Total return is expected to underperform the total return of a relevant benchmark by a
earnings by focusing on a company's after-tax earnings generated from its principal wide margin over the coming 12 months, with shares falling in price on an absolute
businesses. Included in the S&P Capital IQ definition are employee stock option grant basis.
expenses, pension costs, restructuring charges from ongoing operations, write-downs
of depreciable or amortizable operating assets, purchased research and development,
M&A related expenses and unrealized gains/losses from hedging activities. Excluded
Relevant benchmarks:
In North America, the relevant benchmark is the S&P 500 Index, in Europe and in
from the definition are pension gains, impairment of goodwill charges, gains or losses
Asia, the relevant benchmarks are the S&P Europe 350 Index and the S&P Asia 50
from asset sales, reversal of prior-year charges and provision from litigation or
Index, respectively.
insurance settlements.

S&P Capital IQ 12-Month Target Price


The S&P Capital IQ equity analyst's projection of the market price a given security will
command 12 months hence, based on a combination of intrinsic, relative, and private
market valuation metrics, including S&P Capital IQ Fair Value.

S&P Capital IQ Equity Research


S&P Capital IQ Equity Research U.S. includes Standard & Poor's Investment Advisory
Services LLC; Standard & Poor's Equity Research Services Europe includes
McGraw-Hill Financial Research Europe Limited trading as S&P Capital IQ; Standard
& Poor's Equity Research Services Asia includes: McGraw-Hill Financial Singapore
Pte. Limited, Standard & Poor's Investment Advisory Services (HK) Limited, Standard
& Poor's Malaysia Sdn Bhd, and Standard & Poor's Information Services (Australia)
Pty Ltd.

Abbreviations Used in S&P Capital IQ Equity Research Reports


CAGR - Compound Annual Growth Rate
CAPEX - Capital Expenditures
CY - Calendar Year
DCF - Discounted Cash Flow
DDM - Dividend Discount Model
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STANDARD & POOR'S, S&P, S&P 500, S&P CAPITAL IQ, S&P EUROPE 350 and STARS are registered trademarks of Standard & Poor's Financial Services LLC.
Stock Report | September 24, 2016 | NYS Symbol: HMC

Honda Motor Co. Ltd.

Disclosures which is regulated by the Australian Securities & Investments Commission; and in
Japan, by McGraw-Hill Financial Japan KK ("MHF Japan"), which is registered by
S&P Capital IQ ranks stocks in accordance with the following ranking methodologies: Kanto Financial Bureau. SPIAS, MHFRE, SPIAS HK, MHFSPL, S&P Malaysia, SPIS
and MHF Japan, each a wholly owned subsidiary of McGraw Hill Financial, Inc.
operate under the GMI brand.
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S&P Capital IQ's qualitative STARS recommendations are determined and assigned
by S&P Capital IQ equity analysts. For reports containing STARS recommendations S&P Capital IQ and its affiliates provide a wide range of services to, or relating to,
refer to the Glossary section of the report for detailed methodology and the definition many organizations, including issuers of securities, investment advisers,
of STARS rankings. broker-dealers, investment banks, other financial institutions and financial
intermediaries, and accordingly may receive fees or other economic benefits from
those organizations, including organizations whose securities or services they may
Quantitative Stock Reports: recommend, rate, include in model portfolios, evaluate or otherwise address.
S&P Capital IQ's quantitative recommendations quantitative recommendations are
determined by ranking a universe of common stocks based on 5 measures or model
For details on the S&P Capital IQ research objectivity and conflict-of-interest policies,
categories: Valuation, Quality, Growth, Street Sentiment, and Price Momentum. In the
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U.S., a sixth sub-category for Financial Health will also be displayed. Percentile scores
are used to compare each company to all other companies in the same universe for
each model category. The five (six) model category scores are then weighted and For a list of companies mentioned in a Research Report for which McGraw Hill
rolled up into a single percentile ranking for that company. For reports containing Financial, Inc. and/or one of its affiliates own 1% or more of common equity securities
quantitative recommendations refer to the Glossary section of the report for detailed and for a list of companies mentioned in a Research Report that own more than 5% of
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recommendations.S&P Capital IQ believes that the methodologies and data used to
generate the different types of Research Reports are reasonable and appropriate.
Generally, S&P Capital IQ does not generate reports with different ranking This company is not a customer of S&P Capital IQ or its affiliates.
methodologies for the same issuer. However, in the event that different methodologies
or data are used on the analysis of an issuer, the methodologies may lead to different
views or recommendations on the issuer, which may at times result in contradicting
assessments of an issuer. S&P Capital IQ reserves the right to alter, replace or vary General Disclosure
models, methodologies or assumptions from time to time and without notice to clients.
Notice to all jurisdictions:
STARS Stock Reports:
Where S&P Capital IQ's Research Reports are made available in a language
S&P Capital IQ Global STARS Distribution as of June 30, 2016 other than English and in the case of inconsistencies between the English and
Ranking North America Europe Asia Global translated versions of a Research Report, the English version will control and
supersede any ambiguities associated with any part or section of a Research
Buy 24.6% 17.8% 30.0% 23.7%
Report that has been issued in a foreign language. Neither S&P Capital IQ nor its
Hold 48.0% 57.8% 45.0% 49.6%
affiliates guarantee the accuracy of the translation.
Sell 27.4% 24.4% 25.0% 26.7%
Total 100% 100% 100% 100%
Assumptions, opinions and estimates constitute our judgment as of the date of this
material and are subject to change without notice. This document may contain forward
Quantitative Stock Reports: looking statements or forecasts, such statement or forecasts are not a reliable
indicator of future performance.
The rankings for Quantitative reports have a fixed distribution based on relative
weightings as described in the Glossary section of the report. Past performance is not necessarily indicative of future results.

No content (including ratings, credit-related analyses and data, valuations, model,


Analyst Certification software or other application or output therefrom) or any part thereof (Content) may be
modified, reverse engineered, reproduced or distributed in any form by any means, or
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STARS Stock Reports are prepared by the equity research analysts of Standard
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regarding any and all of the subject securities or issuers. Analysts generally
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compensation and SPIAS', MHFRE's or S&P Malaysia's compensation was, is, or
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Stock Report | September 24, 2016 | NYS Symbol: HMC

Honda Motor Co. Ltd.

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Stock Report | September 24, 2016 | NYS Symbol: HMC

Honda Motor Co. Ltd.

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Stock Report | September 24, 2016 | NYS Symbol: HMC

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