Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: Auto Parts and Tires in Japan - **Investor Sentiment**: Attractive outlook for Tires, In-Line for Auto Parts [2][7] Key Insights on Tires Industry - **Durability of Demand**: Replacement tire demand remains strong, with expectations for earnings improvement driven by increased sales of large-diameter tires (18 inches and larger) [2][7] - **Earnings Outlook**: Potential for P/B multiples to re-rate in relation to ROE improvement [2] - **Company-Specific Discussions**: - **Yokohama Rubber**: Questions about the sustainability of recovery in agricultural tires [2] - **Toyo Tire**: Focus on the scale of share buybacks [2] - **Sumitomo Rubber**: Impact of Dunlop brand expansion discussed [2] Key Insights on Auto Parts Industry - **Earnings Momentum**: Limited due to sluggish growth in new vehicle production and normalization of price negotiations with OEMs [2] - **Investor Interest**: High interest in NHK Spring, Musashi Seimitsu, and Nifco, all rated Overweight [2][7] - **Company-Specific Insights**: - **NHK Spring**: Expected to see profit growth as HDD suspensions bottom out in Q2 [2] - **Musashi Seimitsu**: Anticipated meaningful contribution from HSC starting F3/28, with solid auto parts business due to cost improvements [2] - **Nifco**: Expected expansion of share buybacks under the mid-term plan starting F3/27 [2] - **Koito**: Earnings appear to be bottoming out [2] - **Stanley Electric & NOK**: New medium-term plans to be launched from the next fiscal year [2] Market Performance - **Stock Performance**: Notable year-to-date stock price performance for companies like Toyo Tire and Yokohama Rubber, with discussions on whether this momentum can continue into 2026 [7] Risks and Considerations - **Upside Risks**: Rising orders for metal substrates and motor cores, recovery in Honda sales, and expanding orders for BEV decelerator gears [10][12][15] - **Downside Risks**: Potential slump in production for Nissan and Subaru, price pressure from European customers, and weakening demand for parts for European commercial vehicles [11][16] Conclusion - **Overall Sentiment**: The Tires industry is viewed positively with sustainable demand, while the Auto Parts sector faces challenges but has specific companies with growth potential. Investors are advised to monitor individual company performance and market conditions closely [2][7]