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Nissan Motor Company, Ltd.

for Student Managed Investment Portfolio by Michael Gossner

Outline of Presentation
Company Snapshot Company Outlook News and Events Industry Comparison and Outlook Financial and Risk Evaluation Recommendation

Company Snapshot
Stock: Nissan Motor Co., Ltd. (ADR) Ticker: NSANY Industry: Auto Makers 52 Week Range: $12.76 - $16.70 Price as of 03/06/03: $13.96

Company Snapshot
Designs, produces and sells more than 2.5 million passenger cars and commercial vehicles in more than 190 countries. In April of 2000 the company implemented the Nissan Revival Plan. Upon attainment of the goals, the Company embarked upon NISSAN 180 Major production sites - Japan, United States, Mexico, the United Kingdom and Spain.

Company Snapshot
S&P 500 Nissan

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Company Outlook
NISSAN 180

Company Outlook
Renault - Nissan Alliance
Renault Vel Satis with Engine

Nissan 32.5 Liter V-6 Engine

News and Recent Events


December 2002 - Domestic production, overseas production, domestic sales and exports all rose over 2001's levels. First time in 13 years these four indexes have simultaneously surpassed the previous year's results.
January 2003 - Nissan's domestic production, overseas production, domestic sales and exports all rose over the same month last year, marking the first time in four months, since September 2002, that these four indexes have simultaneously registered year-on-year growth.

News and Recent Events


January 2003 - Combined Renault and Nissan sales came to 5,139,505 units in 2002, up 2.9% over 2001. Nissan and Renault sold a total of 2,735,530 and 2,403,975 vehicles, respectively. The Renault-Nissan Alliance global market share came to 9.1% (4.2% for the Renault group and 4.9% for Nissan), ranking the Alliance among the world's five leading automakers.

News and Recent Events


February 2003 - Announced that its patented precrash seatbelt technology will be made available to competitors through a licensing process.

News and Recent Events


February 2003 - Announced the domestic launch of the all-new Teana, which has been developed around the concept of "a luxury sedan for sophisticated drivers."

News and Recent Events


February 2003 - Announced the domestic launch of the fully redesigned Skyline Coupe. Models equipped with automatic and manual transmission were put on the market across the country.

News and Recent Events


January 2003 - Nissan reveals all-new 2004 full-size truck and Triant concept at NAIAS

News and Recent Events


January 2003 - Nissan Reveals All-New 2004 Maxima and Quest, Infiniti FX45 at NAIAS

Industry Outlook
University of Michigan - Auto sales should top 16.6 million units this year [2002]; retreat only slightly to 16.5 million units in 2003 and reach 16.6 million units in 2004 once more. Sales should remain "fairly steady IRN Inc. - Zero-percent financing automakers have offered over the past 12 months has lost its marketing punch. Ford an GM have acknowledged that sales have gone soft.

Industry Outlook
"It's profitless prosperity that we've got going on here" - Michael Robinet, CSM Worldwide The biggest issue facing automakers is what David Cole, Center for Automotive Research in Ann Arbor, Mich., calls the industry's "heinous competition."

Industry Comparison
Stock Nissan Motor ADR Industry Average Toyota Motor ADR Honda Motor ADR DaimlerChrysler AG General Motors Ford Motor Mkt Cap 33,065.0 5,507 88,421 35,371 29,376 17,525 14,203 Sales 49,396 12,081 114,133 60,911 136,142 184,057 163,518

Industry Comparison

Financial Statements and Analysis

Financial Analysis
1997 Sales (Million) Operating Margin Depreciation Net Profit Income Tax Rate Net Profit Margin 49358 10.40% 3819.6 382 30.1 0.80% 1998 54583 9.20% 4134.7 -229.9 NMF NMF 1999 56388 8.60% 4099.6 -6456 NMF NMF 2000 49110 10.70% 2904.8 2670 NMF 5.40% 2001 46588 13.90% 2818.2 2799 NMF 6%

Value Line Estimations


2002 54400 14% 2700 3500 30 6.40% 2003 56800 13% 2700 3100 30 5.40%

Nissan Revival Plan

Nissan 180

Financial Analysis
Nissan 180 Update
Operating Income (1st Half FY 2002) - 84.5% increase from 1st half FY 2001
Consolidated Operating Margin (1st Half FY 2002) - Industry Leading 10.6% Revenues (1st Half FY 2002) - 10.3% Increase Global Sales Volume (1st Half FY 2002) - 7.5% Increase Net Income (1st Half FY 2002) - 24.9% Increase

Financial Analysis
Quick Ratio Current Ratio Return on Assets Return on Inv estment Return on Equity Beta P/E Ratio Relativ e P/E Ratio Nissan 0.82 1.17 5.55 10.04 28.87 0.54 8.7 0.55 Industry 0.7 1.3 2.1 3.7 8.17 1.24 7.99 1

Data Taken From Value Lin and Marketgude

Financial Analysis - Valuations


LAST YEAR 2002 Year NUMBER OF SHARES OUTSTANDING (Mil.) 4,517.00 Millions of Shares MARKET PRICE OF STOCK / SHARE $13.93 Dollars Per Share $35.00 Price of Stock All Data NET INCOME AFT ER TAXES $2,798.00 Millions of Dollars Expected in Required TOTAL SALES OR REVENUES $46,588.00 Millions of Dollars 5 years BOOK VALUE OF EQUITY (FROM BALANCE SHEET ) $12,186.00 Millions of Dollars RISK FREE RAT E (T- Bill) 2.50% Annual Percentage Rate DIVIDENDS PAID (T OTAL AMOUNT PAID) $209.00 Millions of Dollars ST OCK REPURCHASES (T OTAL AMOUNT PAID) $0.00 Millions of Dollars REQUIRED INFORMAT ION FOR CALCULATION OF REQUIRED RAT E OF RETURN BETA OF ST OCK 0.54 Required MARKET RISK PREMIUM (5%-6% Historically) Data 5.50% Expected Market Risk Premium % REQUIRED INFORMAT ION FOR VARIABLE GROWTH RATE VALUATIONS M ust be po sitiv e EXPECTED GROWTH RATE (EARNINGS OR v alues in each cell 7.0000% 7.0000% 6.0000% 4.0000% 4.0000% DIVIDENDS & STOCK REPURCHASES)

COMPUT ER-GENERAT ED CALCULATIONS EARNINGS PER SHARE LAST CASH DIVIDEND & STOCK REPURCHASE PAYMENT PER SHARE EXPECTED ANNUAL GROWTH RATE (EARNINGS OR DIVIDENDS & STOCK REPURCHASES) EXPECTED EARNINGS PER SHARE IN 5 YEARS SUSTAINABLE RAT E OF GROWTH REQUIRED RATE OF RETURN (k) REQUIRED RATE OF RETURN (k) REQUIRED RATE OF RETURN (k) $0.62 $0.05

5.43% $0.60 21.25% 5.47% 5.78% 5.62%

Geometric Mean of Annual Rates (ROE * (1-Payout Ratio)) CAPM Dividend Discount Model Average of CAPM and DDM

COMPUT ER-GENERAT ED CALCULATIONS ST OCK VALUE - ZERO GROWT H MODEL ST OCK VALUE - CONSTANT GROWTH MODEL ST OCK VALUE - VARIABLE GROWTH MODEL ST OCK VALUE - DIVIDEND & EARNINGS MODEL ST OCK VALUE - PRICE / EARNINGS MODEL $0.82 $24.76 $3.20 $26.85 $30.59 Not applicable for most stocks

AVERAGE PRICE

$21.35

Financial Analysis - Valuations


Name of Company Nissan Motor Co., Ltd. $1,836.07 Computer Calculates 8.00% See Note 1 4.00% See Note 2 5.91% Computer Calculates 8 Years 0 Up to 20 4,517.00 30.10% $41,480.00 Insert Initial Free Cash Flow (Computer) Insert Initial Growth Rate Insert Terminal Growth Rate Insert Weighted Average Cost of Capital How Many Years is Growth Projected Number of Shares of Common Stock Tax Rate Total Debt Outstanding Estimate Free Cash Flow Current Sales ($) EBIT Margin (%) EBIT Plus - Depreciation Less - Capital Expenditures Less - Net Change in Working Capital Equals Operating Cash Flow Less Taxes Equals Free Cash Flow $46,588.00 7.80% $3,633.86 $3,372.00 $2,375.00 $1,701.00 $2,929.86 $1,093.79 $1,836.07

Estimate Weighted Average Cost of Cap 8.220% Cost of Equity Capital 7.500% Before Tax Cost of Debt 5.500% Market Risk Premium (R-RF) M 77.500% Debt Ratio (Total Debt/Total Assets) 0.540 Beta 5.250% Risk-free Rate (Use L-T Treasury Rate 5.912% = Weighted Average Cost of Capital
See Note 3

Year Free Cash Flow Terminal Value Total FCF Discounted FCF Net Present Value of FCF Net Present Value of FCF Minus Debt Per Share Value

0 $0

1 $1,983

2 $2,142

3 $2,313

4 $2,498

5 $2,698

6 $2,914

7 $3,147

8 $3,398 $184,810

9 $0 $0 $0 $0

10 $0 $0 $0 $0

11 $0 $0 $0 $0

12 $0 $0 $0 $0

13 $0 $0 $0 $0

14 $0 $0 $0 $0

15 $0 $0 $0 $0

$0 $0 $132,774

$1,983 $1,872

$2,142 $1,909

$2,313 $1,947

$2,498 $1,985

$2,698 $2,024

$2,914 $2,064

$3,147 $2,105

$188,208 $118,868

$91,294

Note: Terminal Growth Rate Must be less than WACC for projections of 1 or more years; for valuations based on 0 years of projections, WACC must be > Growth Rate

FREE CASH FLOW VALUATION MODEL

$20.21

Notes: 1. Terminal Value is growing perpetuity of final year's Free Cash Flow [(FCF) / (WACC - Growth Rate)] 2. If Number of years of projected growth is "0", then Net Present Value of Free Cash Flows is growing perpetuity of Free Cash Flow [(FCF*(1+Growth Rate) / (WACC - Growth Rate)

Financial Analysis - Valuation


MARKET VALUE OF EQUITY INPUT NUMBER OF SHARES OUTSTANDING (Millions) INPUT MARKET PRICE OF STOCK / SHARE MARKET VALUE OF EQUITY IS REQUIRED INFORMATION FOR COMPARABLE RATIOS INPUT REQUIRED DATA Nissan Honda Market Value of Equity / Sales Ratio Market Value of Equity / Book Value Price Earnings Ratio 1.34 0.26 4,517 $13.90 $62,786 Toyota 1.40 Ford 0.08 Chrysler 0.18 AVERAGE 0.65 Times

4.05

0.75

2.76

2.39

0.75

2.14

Times

8.70

9.31

13.33

138.85

5.53

35.14

Times

OUTPUT INDICATED VAUE OF EQUITY INPUT SALES FOR YOUR FIRM INPUT BOOK VALUE OF EQUITY FOR YOUR FIRM INPUT NET INCOME FOR YOUR FIRM $46,588.0 In Millions $30,394

$54,248.0

In Millions

$116,045

$2,798.0

In Millions

$98,333 AVERAGE VALUE OF EQUITY $81,590.69 PER S HARE

$21.77

Financial Analysis - Valuation


Basic Stock Valuation - $21.35 Free Cash Flow Valuation - $20.21 Valuation By Comparables - $21.77 ValuePro.Net - $24.95 Average Intrinsic Value - $22.07

Risk Analysis
RiskGrade: 118 Minimum:109 Maximum:195 Average:158

76% Of all U.S. Tickers Are More Risky Than Nissan

Recommendation
Buy (To Be Continued..)

Strong Performance Resulting from Nissan Revival Plan Strong Expected Performance from Nissan 180 Industry Outlook favors International AutoMakers over Domestic Producers Undervalued Stock and Solid Financials