Mazda Motor Corp. rose the most in more than four years in Tokyo trading after Bank of America Corp. Merrill Lynch recommended buying the shares, citing the improving profitability of new vehicles and a weaker yen.
Mazda, expecting to return to profit after four consecutive annual losses, climbed as much as 12 percent, headed for the biggest gain since Jan. 7, 2009, on the Tokyo Stock Exchange to 198 yen before trading at 194 yen as of 1:54 p.m., local time. The benchmark Nikkei 225 Stock Average rose 0.8 percent.
The carmaker has more than doubled in Tokyo trading over the past three months as it benefits from demand for vehicles with greater fuel efficiency and an 11 percent depreciation in the yen over the same period. It sold 143,646 units of the CX-5 crossover between February and November, the first vehicle fully fitted with the so-called Skyactiv fuel-saving technology, the Hiroshima, Japan-based company said.
“Earnings look poised for robust recovery over the coming few quarters” from the initial production growth in new models and better profitability of Skyactive-fitted vehicles, Takaki Nakanishi, a Tokyo-based auto analyst at Bank of America Corp. Merrill Lynch, wrote in a report dated yesterday. “The weakening yen will magnify improvements in earnings a notch further.”
By March 2016, Mazda plans to equip 80 percent of its vehicles with Skyactiv technology to meet demand for cars that consume less fuel.
The Japanese currency traded at 88.15 yen against the dollar as of 2:16 p.m. in Tokyo, compared with 78.18 yen on Oct. 10, 2012.
Mazda gets about 84 percent of unit sales overseas, making it vulnerable to gains in the yen, which erode the value of earnings from outside Japan.
A one-yen movement against the dollar has a 3.5 billion yen ($40 million) effect on the carmaker’s annual operating profit, while the same move against the euro will make a 1.2 billion yen difference, according to Mazda.
President Takashi Yamanouchi has said the CX-5 model can be profitable even at an exchange rate of 77 yen to the dollar.