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Honda

7267.TMEDIUM

Tactical · Weight: 6%· Data as of 2026-06-01

¥1,262.5-0.32%

6-month daily

Investment Thesis

HOLD — EV pivot absorbed; AI Foundation Model thesis accelerating. Honda cancelled its North America 0 Series EV programme in March 2026 (¥2.5T write-downs, first net loss since 1957), pivoting to 15 new hybrid models by FY2030. Near-term, this is arguably better: hybrids generate real margin while EV mass-market remains unprofitable. PB 0.56 — still trading well below book. The sovereign AI angle is STRENGTHENING: Honda is co-founder of Japan AI Foundation Model Development (SoftBank/NEC/Sony/Honda), contributing 2.3M hours of autonomous driving data + ASIMO manipulation traces. Alliance now counts 30 corporations, NEDO ¥1T/5yr funding applied Apr 2026. Motorcycle business at record highs (Asia/EM cycle). Thesis breaks if: (a) NEDO rejects AI Foundation Model grant, (b) hybrid launch volumes disappoint FY2027, (c) PB rises above 0.9x before earnings recover.

Risk

1) FY2025 net loss ¥423.9B — FY2026 guided OP ¥500B is a recovery year, not a rebound. OpMar guided ~2.2% (¥500B / ¥23.15T). 2) Honda 0 Series cancelled for North America — near-term EV catalyst removed. ASIMO OS now only on India/Japan-market 0 Alpha + next-gen late 2020s. 3) Japan AI Foundation Model is a 5-year project — no P&L impact before FY2028 at earliest. 4) ChargeScape V2G JV (BMW/Ford) purpose unclear after NA EV cancellation.

Monitoring Trigger

If NEDO formally awards ¥1T program to Japan AI Foundation Model JV (expected summer 2026), maintain 6%. If Honda hybrid sales exceed 1M units in FY2026 (year ending Mar 2027), ADD to 8%. If OpMar stays below 2.0% for two consecutive quarters, TRIM to 4%. If PB crosses 0.85x, reassess value thesis.

Key Dates

2026-08-12earningsQ1 FY2026 results — first post-EV-cancellation quarter; monitor adjusted OP margin recovery

2026-H2catalystNEDO formal award decision for ¥1T Japan AI Foundation Model program

2027catalystFirst hybrid model launches from 15-model hybrid expansion programme

2027catalystJapan AI Foundation Model 1T-parameter model first results

Update History

2026-06-01evolveHOLD

View report →

Major thesis update: Honda 0 Series NA cancelled Mar 2026 (¥2.5T write-downs). Hybrid pivot announced (15 models by FY2030). Japan AI Foundation Model JV strengthening (30 companies, ¥1T NEDO). PB 0.39→0.56, div yield 5.5%→~3.3%, market cap N/A→¥5.65T. Weight 7%→6%. HOLD.

pb:0.390.56forward_pe:7.511.71div_yield:5.5%~3.3%market_cap:N/A¥5.65Top_margin:2.9%2.2% (FY2026 guided)thesis:0 Series EV launch H1 2026EV cancelled; hybrid pivot + AI Foundation Modelsupply_chain[0]:Renesas confirmed primaryJapan AI Foundation Model confirmed primary (upgraded); Renesas stale (delayed to late 2020s)weight:0.070.06key_dates:empty4 entries added

Key Metrics

10.5

11.71

Fwd PE

0.56

P/B

negative (FY2025 write-down year; normalized ~4-5%)

ROE

2.2% (FY2026 guided; FY2025 reported negative due to ¥2.5T EV impairments)

Op Margin

106.0%

D/E

~3.3%

Div Yield

negative (FY2025 write-down); recovery guided FY2026

FCF

¥5.65T

Mkt Cap

Business Segments

Segment	Revenue	Share	Description
Motorcycle			Record-high unit sales and OP Asia/EM — cycle rotation signal confirmed
Automobile			Hybrid pivot: 15 new hybrid models by FY2030; NA EVs cancelled
Financial Services			Honda Finance — auto loans, insurance

Supply Chain Evidence

Evidence	Customer	Product	Detail
confirmed	Japan AI Foundation Model Development (JV co-founder)	Autonomous driving + robotics physical AI — 2.3M hours training data	Honda co-founded Japan AI Foundation Model Development with SoftBank, NEC, Sony (Apr 13, 2026). Now 30 companies. Honda contributes 2.3M hours of teleoperated driving data + ASIMO manipulation traces. NEDO ¥1T/5yr funding applied. Target: 1T-parameter model by 2027.[source](2026-04)
stale	Renesas Electronics (JV partner)	High-performance SoC for ASIMO OS with 2,000 TOPS AI performance	TIMELINE EXTENDED: After NA 0 Series cancellation, Renesas SoC now targeted at next-generation 0 Series in late 2020s. Still active agreement but pushed out >3 years. India/Japan market 0 Alpha Series uses existing chips.[source](2025-01)
stale	Helm.ai (technology partner)	Vision AI for autonomous driving	Original partnership for Honda 0 Series NA — product cancelled. Helm.ai tech may continue in India/Japan 0 Alpha or next-gen; confirmation pending.[source](2025-01)
stale	ChargeScape (JV with BMW and Ford)	Vehicle Grid Integration (VGI) software for EV charging	Honda co-founded ChargeScape for V2G. Status uncertain after NA EV cancellation. JV may refocus on markets where Honda still sells EVs (Japan, India). Monitor.[source](2025-01)
confirmed	Asia/EM motorcycle markets (Honda internal)	Hybrid and ICE motorcycles — record volumes Vietnam, India	Confirmed cycle_rotation signal: Honda catching up in Vietnam/India e-motorcycle markets. Motorcycle segment at record-high unit sales and OP as of FY2025.[source](2026-04)

Sources & References

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Peer Comparison

Company	PE	Fwd PE	ROE	Op Margin	FCF
Fujitsu	17.95	18.12	15.8%	11.2%	+¥290B
NEC Corporation	20.9	17.45	12.1%	11.1%	+¥202B
Sony	17.6	15.1	14.3%	11.6%	+¥1,490B
Honda	10.5	11.71	negative (FY2025 write-down year; normalized ~4-5%)	2.2% (FY2026 guided; FY2025 reported negative due to ¥2.5T EV impairments)	negative (FY2025 write-down); recovery guided FY2026
SoftBank Group	6.7	34.2	N/A (mark-to-market dominated)	N/A	N/A
NTT (Nippon Telegraph & Telephone)	11.7	12	11.0%	12.5%	+¥1.0T+
Nomura Research Institute (NRI)	21.8	24.4	23.0%	7.2%	+¥80B
Nippon Steel			N/A (loss)	N/A	negative (US Steel integration)