Create 5 year (2018-2022) projection for Yamaha Motor Corp (YAMHF), using the in
ID: 435778 • Letter: C
Question
Create 5 year (2018-2022) projection for Yamaha Motor Corp (YAMHF), using the information below: Please explain how you obtained your info.
Year
ROE%
Sales (MM)
OPM%
ROI%
Leverage%
LTD(MM)
Equity(MM)
2022
2021
2020
2019
2018
2017
17.6
9397
8.97
12.8
37.35
2233
5978
2016
12.3
8362
7.2
8.1
46.71
2415
5171
2015
12.6
9283
7.46
7.9
4.81
2093
4778
2014
16.2
8789
5.74
10
53.78
2432
4765
2013
12.7
8345
3.91
7.5
49.33
1874
3799
2012
2.5
7180
1.54
2.5
67.22
2063
3069
2011
9.7
7979
4.18
8.4
72.31
2014
2785
2010
7.5
8219
3.96
-6.3
97.29
2717
2793
2009
-71.2
7345
-5.42
-39.3
143.67
3218
2240
2008
0.4
9249
3.02
1.14
39.02
1502
3851
Year
ROE%
Sales (MM)
OPM%
ROI%
Leverage%
LTD(MM)
Equity(MM)
2022
2021
2020
2019
2018
2017
17.6
9397
8.97
12.8
37.35
2233
5978
2016
12.3
8362
7.2
8.1
46.71
2415
5171
2015
12.6
9283
7.46
7.9
4.81
2093
4778
2014
16.2
8789
5.74
10
53.78
2432
4765
2013
12.7
8345
3.91
7.5
49.33
1874
3799
2012
2.5
7180
1.54
2.5
67.22
2063
3069
2011
9.7
7979
4.18
8.4
72.31
2014
2785
2010
7.5
8219
3.96
-6.3
97.29
2717
2793
2009
-71.2
7345
-5.42
-39.3
143.67
3218
2240
2008
0.4
9249
3.02
1.14
39.02
1502
3851
Explanation / Answer
Defining some key ratios:
ROE = Return on Equity = Net Income/ Shareholder's Equity
OPM = Operating Profit Margin = Operating Profit / Sales
ROI = Return on Investment = Net Income / (Total Innvestment i.e Debt + Equity)
Leverage = Total Debt/ Total Equity
Net Margin = Net Income/Sales
LTD: Long Term Debt
Assumptions:
1. The average ROE for the Automobile Indutry stands at around 15%. Since Yamaha is ammong the leaders in the Motorbike segment, it would try to gradually raise the ROE to 21 till 2022
2. Sales growth has been taken at the same year on year growth rate as it has been in the past 5 years. Since it is a cyclical industry, such trends are viable.
3. There has been consistent improvement in the OPM% over the past five years. hence by lowering the Cost of Goods & other variable costs, Yamaha should intend to improve it further at 0.25 increment starting at 9 from 2018.
4. Since automobiles is a capital intensive industry the average leverage % is more around 55 -60. Hence gradually raising the leverage at 5 increment year-on-year starting at 40 from 2018.
5. Net Margin has seen around 1% improvement year-on-year in the past 5 years, continuing a similar trend to reach 16% till 2022.
Rest of the values are calculated based on the formulas or ratios shared above.
Year ROE% Sales (MM) Sales Growth y-o-y OPM% OP Profit ROI% Leverage% LTD(MM) Equity(MM) Net Income Net Margin 2022 21 12298.6 12.38% 10.25 1260.6 13% 60 5622 9370 1968 16% 2021 20 10944.0 -9.92% 10 1094.4 13% 55 4514 8208 1642 15% 2020 19 12149.4 5.62% 9.5 1154.2 13% 50 4476 8952 1701 14% 2019 18 11502.8 5.32% 9.25 1064.0 12% 45 3738 8308 1495 13% 2018 17 10921.7 16.23% 9 983.0 12% 40 3084 7709 1311 12% 2017 17.6 9397 12.38% 8.97 842.911 12.8 37.35 2233 5978 1052.128 11% 2016 12.3 8362 -9.92% 7.2 602.064 8.1 46.71 2415 5171 636.033 8% 2015 12.6 9283 5.62% 7.46 692.512 7.9 4.81 2093 4778 602.028 6% 2014 16.2 8789 5.32% 5.74 504.489 10 53.78 2432 4765 771.93 9% 2013 12.7 8345 16.23% 3.91 326.29 7.5 49.33 1874 3799 482.473 6% 2012 2.5 7180 -10.01% 1.54 110.572 2.5 67.22 2063 3069 76.725 1% 2011 9.7 7979 -2.92% 4.18 333.522 8.4 72.31 2014 2785 270.145 3% 2010 7.5 8219 11.90% 3.96 325.472 -6.3 97.29 2717 2793 209.475 3% 2009 -71.2 7345 -20.59% -5.42 -398.099 -39.3 143.67 3218 2240 -1594.88 -22% 2008 0.4 9249 NA 3.02 279.32 1.14 39.02 1502 3851 15.404 0%