Quantitative Researcher, MRM Research

Nico Rosti

Quantitative Researcher

MRM Research

Quantitative Research

Equity Derivatives

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> expects U.S. tariffs, material costs and a weak(er) dollar to dent profits.  The automaker estimated the levies directly costing it 180 billion yen in April/May.</li>
<li>The stock fell after the company reported its fiscal-fourth-quarter results on Thursday. Guidance for the coming year came in lower than expected, with tariffs taking a bite out of profits.</li>
<li>In a <a href="https://www.smartkarma.com/insights/toyota-7203-jp-tactical-outlook-following-toyota-industries-6201-jp-privatization-rumors" target="_blank" rel="noopener">previous insight</a> we flagged the stock as overbought; those model targets remain valid. Here, we analyze updated support to gauge the pullback's potential depth.
</li>
</ul>



Toyota Motor (7203 JP) expects U.S. tariffs, material costs and a weak(er) dollar to dent profits.  The automaker estimated the levies directly costing it 180 billion yen in April/May.
The stock fell after the company reported its fiscal-fourth-quarter results on Thursday. Guidance for the coming year came in lower than expected, with tariffs taking a bite out of profits.
In a previous insight we flagged the stock as overbought; those model targets remain valid. Here, we analyze updated support to gauge the pullback's potential depth.



Toyota (7203 JP) Post-Earnings Outlook Amid ¥180B Estimated U.S. Tariff Cost

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> said in a Tokyo stock exchange filing on Saturday that it is exploring the possibility of investing in a potential buyout of key supplier Toyota Industries.</li>
<li>Bloomberg reported Friday that <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a>  Chairman Akio Toyoda and his family proposed acquiring <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a>  in a possible 6 trillion yen ($42 billion) transaction.</li>
<li>The stocks of both companies were rising on Monday, this insight focus on tactical positioning on Toyota Motor:the stock appears very OVERBOUGHT according to our models.</li>
</ul>



Toyota Motor (7203 JP) said in a Tokyo stock exchange filing on Saturday that it is exploring the possibility of investing in a potential buyout of key supplier Toyota Industries.
Bloomberg reported Friday that Toyota Motor (7203 JP)  Chairman Akio Toyoda and his family proposed acquiring Toyota Industries (6201 JP)  in a possible 6 trillion yen ($42 billion) transaction.
The stocks of both companies were rising on Monday, this insight focus on tactical positioning on Toyota Motor:the stock appears very OVERBOUGHT according to our models.


Toyota (7203 JP) Tactical Outlook Following Toyota Industries (6201 JP) Privatization Rumors

Derivatives and Quantitative Strategist

Gaudenz Schneider

<ul>
<li>The global auto industry faces significant tariff exposure. Option implied volatility offers a forward-looking assessment of risk.</li>
<li>Chinese car makers started to increase in implied volatility more than the other markets at the beginning of February. They now show the highest risk.</li>
<li>Recent implied volatility trends, asymmetric pricing (skew), and the term structure all seem to indicate that the Indian auto sector is the least exposed to international trade relations.</li>
</ul>


The global auto industry faces significant tariff exposure. Option implied volatility offers a forward-looking assessment of risk.
Chinese car makers started to increase in implied volatility more than the other markets at the beginning of February. They now show the highest risk.
Recent implied volatility trends, asymmetric pricing (skew), and the term structure all seem to indicate that the Indian auto sector is the least exposed to international trade relations.


EQD | Volatile Roads: Unveiling Risk in the Asian Auto Industry Through the Options Market

<ul>
<li>Japanese Prime Minister Shigeru Ishiba's meeting with US President Trump shines the spotlight on potential US tariffs on Japanese cars. <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor's (7203 JP)</a> high implied volatility expresses elevated risk.</li>
<li>Risk analysis suggests a range of option strategies. Implementation is challenging due to low liquidity in the Japanese market.</li>
<li>Option liquidity is higher in the US traded <a href="https://www.smartkarma.com/entities/toyota-motor-corp-spon-adr" target="_blank" data-smartkarma-citation="entities:8245:1" rel="noopener">Toyota Motor Corp Spon ADR (TM US)</a> which is the preferred route of implementation.</li>
</ul>


Japanese Prime Minister Shigeru Ishiba's meeting with US President Trump shines the spotlight on potential US tariffs on Japanese cars. Toyota Motor's (7203 JP) high implied volatility expresses elevated risk.
Risk analysis suggests a range of option strategies. Implementation is challenging due to low liquidity in the Japanese market.
Option liquidity is higher in the US traded Toyota Motor Corp Spon ADR (TM US) which is the preferred route of implementation.


EQD | Toyota (7203 JP // TM US) - Option Opportunities Amid Tariff Tension

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>It's unlikely that the transition to ‘company with audit committee’ will enhance the supervisory function, but it's likely to speed up the decision-making process by delegating authority to executive directors.</li>
<li>Instead of achieving 30% female board member and moving to Company with US-type 3 Committees at once, Toyota will implement Toyota's way firmly with BOD that is half independent directors.</li>
<li>The only way for Toyota, which faces several governance challenges, to uphold tradition of Toyoda family being at the top of management is to make the returns expected by investors.</li>
</ul>


It's unlikely that the transition to ‘company with audit committee’ will enhance the supervisory function, but it's likely to speed up the decision-making process by delegating authority to executive directors.
Instead of achieving 30% female board member and moving to Company with US-type 3 Committees at once, Toyota will implement Toyota's way firmly with BOD that is half independent directors.
The only way for Toyota, which faces several governance challenges, to uphold tradition of Toyoda family being at the top of management is to make the returns expected by investors.


The Toyota Way Is Not to Rush, but to Gain a Foothold and Proceed with Caution

Japan

Toyota Motor Corporation manufactures, sells, leases, and repairs passenger cars, trucks, buses, and their related parts worldwide. The Company also operates financing services through their subsidiaries. Toyota Motor builds homes, produces pleasure boats, and develops intelligent transportation systems including radar cruise control and electronic toll collection systems.

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Toyota Motor (7203 JP)

Toyota (7203 JP) Post-Earnings Outlook Amid ¥180B Estimated U.S. Tariff Cost

Toyota Motor Corp said it expects U.S. tariffs to impact considerably its profits. The stock fell on Thursday, but was really overbought according...

Nico Rosti

Toyota (7203 JP) Tactical Outlook Following Toyota Industries (6201 JP) Privatization Rumors

Rumor: Toyota Motor is considering investing in a potential buyout of key supplier Toyota Industries, both companies' stocks are rising. Our...

Nico Rosti

EQD | Volatile Roads: Unveiling Risk in the Asian Auto Industry Through the Options Market

Global auto industry faces tariff risk. The option market assigns the highest risk to Chinese car makers. The Indian auto sector appears least...

Gaudenz Schneider

EQD | Toyota (7203 JP // TM US) - Option Opportunities Amid Tariff Tension

Toyota Motor's high implied volatility indicates elevated risk due to potential US tariffs but offers opportunity as well.

Gaudenz Schneider

The Toyota Way Is Not to Rush, but to Gain a Foothold and Proceed with Caution

I would like to discuss the issues on the 26 February Nikkei newspaper "Toyota, half of its board members are outside directors, ‘challenging’...

Metrical Inc

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Toyota (7203 JP) Post-Earnings Outlook Amid ¥180B Estimated U.S. Tariff Cost

​Toyota Motor Corp said it expects U.S. tariffs to impact considerably its profits. The stock fell on Thursday, but was really overbought according...

Nico Rosti

Toyota (7203 JP) Tactical Outlook Following Toyota Industries (6201 JP) Privatization Rumors

Rumor: ​Toyota Motor is considering investing in a potential buyout of key supplier Toyota Industries, both companies' stocks are rising. Our...

Nico Rosti

EQD | Volatile Roads: Unveiling Risk in the Asian Auto Industry Through the Options Market

​Global auto industry faces tariff risk. The option market assigns the highest risk to Chinese car makers. The Indian auto sector appears least...

Gaudenz Schneider

EQD | Toyota (7203 JP // TM US) - Option Opportunities Amid Tariff Tension

Toyota Motor's high implied volatility indicates elevated risk due to potential US tariffs but offers opportunity as well.

Gaudenz Schneider

The Toyota Way Is Not to Rush, but to Gain a Foothold and Proceed with Caution

I would like to discuss the issues on the 26 February Nikkei newspaper "Toyota, half of its board members are outside directors, ‘challenging’...

Metrical Inc

Toyota Motor Corp said it expects U.S. tariffs to impact considerably its profits. The stock fell on Thursday, but was really overbought according...

Rumor: Toyota Motor is considering investing in a potential buyout of key supplier Toyota Industries, both companies' stocks are rising. Our...

Global auto industry faces tariff risk. The option market assigns the highest risk to Chinese car makers. The Indian auto sector appears least...