Honda Engine Organization.

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Honda Engine Organization. Exhibited By: Zach Bodine Walk 9, 2006. Cost 52-Week High 52-Week Low Normal Volume (3 months) Market Capitalization. $29.54 $30.36 $23.75 539,598 $55.55 Bil. Stock Essentials. Speculation Proposal. Purchase/Hold. Proportions (all per offer) P/E Proportion
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Honda Motor Company Presented By: Zach Bodine March 9, 2006

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Price 52-Week High 52-Week Low Average Volume (3 months) Market Capitalization $29.54 $30.36 $23.75 539,598 $55.55 Bil Stock Fundamentals

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Investment Recommendation Buy/Hold

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Ratios (all per offer) P/E Ratio Earnings Dividend and Yield Financial Strength Ratios Quick Current Long-Term D/E Total Debt to Equity Return on Equity (per offer) Return on Assets 13.46 $2.19 0.34 (1.10%) 0.84 1.13 0.839 13.52% 5.03% Key Ratios

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Over the previous 5 Years Revenue Dividend Per Share Earnings Per Share Operating Income 7.2% 19.42% 14.1% 8.2% Growth Percentages

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Company Description Automotive Manufacturers – Major Automobiles Motorcycles Power Products Financial Services Honda is the World’s Largest bike producer however is most known for its car industry

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Global Position Over 9 month compass Honda created 59% of its car benefit from the North America alone, which was an increment of 2.5% from a year back. Then again, Asia drove in Motorcycle deals with 27.5%, while N.A. had 25.5%. This was inverse of a year prior. Deals throughout the previous 9 months finished Dec 30, 2005 totaled $60.9B, and Sales for all of 2005 totaled $80.5B .

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Honda’s Automobile Brands Honda’s essential car items incorporate traveler autos under: Legend, Accord, Civic, City, Fit Saloon, Acura RL, Acura TL, and Acura TSX brands Multiwagons, Minivans, Sport utility vehicle, and Sports roadster under: Elysion, Odyssey, Step Wagon, Edix, FR-V, Stream, Fit, Jazz, Pilot, Element, CR-V, Acura MDX, and Acura RSX brands

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Consumer Reports Top Automobile picks for 2006 Top Small Sedan (not exactly $20gs) Top Family Sedan ($20-$30gs) Top Upscale Sedan ($30-40gs) Luxury Sedan SUV ($30gs and the sky is the limit from there) Small SUV (not exactly $30gs) Top Minivan Top Pick-up Truck Green Car Fun to drive Honda Civic Honda Accord Acura TL (Honda) Infiniti M35 (Nissan) Toyota Highlander Hybrid Subaru Forester Honda Odyssey Honda Ridgeline Toyota Prius Subaru Imprezza Additionally, Honda was 2 nd in general in vehicle unwavering quality directly behind Lexus

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Marketing/Technology The new ACE System (Advanced Compatibility Engineering) 5 star rating Hybrid Engines ASIMO Jet Engines Manufacturing Nattokinase

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Research and Development Honda as of now has individualized R&D offices in Japan for cruisers, cars, and force items, and a bike R&D focus in China for its expanding business sector request. HRI (the Honda Research Institute) is situated in Japan, U.S., and Germany. - Research concentrate on: mechanical autonomy innovation, car safety, ultra lightweight items, and energy unit innovation - Deriving car fuel from plants. Honda additionally has organized offices in the UK, Germany and Italy (to help concentrate on the European showcase all the more autonomously)

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Management Structure President and Representative Director Takeo Fukui Age: 62 Executive Vice-President and Representative Director Satoshi Aoki Age: 60 Promotion of Objective Management: Staff made out of 22 work force. Two executive positions and one auditor alloted yearly outside the organization. Provisional executives are paid by well the Company performs amid their tenor.

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Image New Jersey Supreme Court: Honda sued for motor disappointment by a renter. Magnussen Warranty Act Engine disappointment happened @ 22,000 miles Losing organization must cover every lawful charge AAM bolsters Honda Clean-Fuel charge reasoning (2005) Tax breaks under new vitality bill (2006)

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Competitive Analysis

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Industry Trends Trend of Companies performing great in outside business sectors, yet not locally. GM: Dealing with Health care issues ($100B every year) Sold GMAC Subsid. Plausibility of chapter 11 later on Ford: $1.6B decrease in auto deals from years finishing 04’ – 05’ Sold Hertz rentl auto business Chrysler: Changes administration around Only U.S. producer not in the red Volkswagen: high costs, low quality, in addition to work power issues Toyota and Honda are flourishing admirably in U.S. market Everyone looks to China for expansion

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Market Performance One Year Price Performance Compared to the S&P 500

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Market Performance 5 year Price Performance Compared to the S&P 500

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Common Size Financials

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Valuation Data For Return on Equity Beta = .46 Risk Free Rate = .486 Avg. Business sector Risk = 11% Re = Rf + B(Equity Risk Premium) Re = .0486+.46(.11-.0486) = 7.68%

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Valuation of Stock Price Intrinsic Value in view of Future Cash Flows Conservative Growth rate Normal Growth Re= 7.68% Owner earnings= $3.14B Growth rate = 4% Second Stage Growth rate = 2.5% Estimated Intrinsic Value= $39.11

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Valuation kept Diminishing Growth Using income development of 14.3% from 2003-2004, and 6% from 2004-2005, you could extend that income development from 2005-2006 could be equivalent to: 6/14.3=.4196 .4196*6= 2.52% (new accepted development rate) Leaving every single other variable the same Estimated Intrinsic Value = $34.84

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Valuation continued….. Great development By Viewing the table which shows deals in yen over the 9 months finished 12/31/2004, and after that taking a gander at the deals in yen for the 9 months finished 12/31/2005 you get the accompanying numbers 2004 deals = 6300551 2005 deals =7074255 Growth rate= 7074255/6300551= 12.2% Adjusted to 10% Estimated Intrinsic Value = $62.50

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Analysts Ratings

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Pros and Cons Pros: Fuel/cost proficient items and innovation Extensive R&D programs Superior Technology Moving towards separated product offerings One of the few as of now benefitting organizations in its industry Objective Management Structure Continuous increment in car deals in North America, especially U.S., and in Europe also. Cons: Fluctuation of Exchange rates, makes for conflicting profit Japan’s Economy Automotive industry extremely vulnerable to intrigue rates Toyota may be a superior purchase

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Questions ?

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