Asian Equities Traded in the US as American Depositary Receipts Down in Friday Trading; Up Over 3% for Week

By Peter Landers

Suzuki Motor was a Japanese maker of small cars with a small presence compared with Toyota and Honda. But Osamu Suzuki had the idea of going where the giants wouldn't and built the biggest automaker in what is now the world's most populous nation, India.

Suzuki, who died Wednesday of lymphoma at age 94, led the car and motorcycle maker that bears his name for more than four decades. He was always looking for niches and trying to navigate a world dominated by big names such as General Motors and Volkswagen — both of which held stakes in Suzuki before pulling out.

Suzuki Motor no longer sells cars in the U.S., but its motorcycles remain popular among Americans.

In the early 1980s, India was looking for a partner to start a car industry. "A government mission came to Japan, and at that time the only top executive at a Japanese automaker who would meet with them was me," Suzuki recalled in a 2022 interview with the magazine Bungei Shunju. That landed him a deal for a joint-venture factory.

Initially, Suzuki held a 26% stake in the India venture and had to overcome the challenges of building cars in a country with poor roads and few skilled workers. But persistence paid off — Suzuki estimated he visited India some 300 times — and the India business, which the company now controls with a majority stake, has held a market share of more than 40% in recent years. It sold nearly 1.8 million vehicles in India in the year ended March 2024, more than half of Suzuki's total car sales.

Born Osamu Matsuda on Jan. 30, 1930, in a mountainous area of central Japan, the future leader of the carmaker took the Suzuki name after marrying the daughter of the company's then-president.

Starting in 1978, Osamu Suzuki served as president and later chairman for 43 years before yielding the reins to his son, Toshihiro Suzuki, who is currently president. Even into his 90s, Osamu Suzuki said he went to the office every day.

Suzuki prided himself on hands-on management and would inspect each of his factories for a full day every year. "I keep an eye peeled for any waste," he said. "For instance, I'll look up at the ceiling and say, 'Do we really need that fluorescent light,' or I'll find a gap between machines and say, 'Isn't that wasted space?'"

Volkswagen took a 19.9% stake in Suzuki after GM pulled out, but the two companies were ensnared in legal disputes and ended their partnership in 2016. Osamu Suzuki then negotiated an alliance with Toyota, which now holds a 5% stake in Suzuki Motor.

The bushy eyebrowed, gregarious Suzuki was known for his love of small cars — the kind he had long sold in India and his other main market, Japan, where Suzuki vans carrying people and goods are a frequent sight especially in the countryside. "Being small is a really good thing," he said. "A diamond sparkles even if it is small."

Write to Peter Landers at Peter.Landers@wsj.com

Asian equities traded in the US as American depositary receipts were higher Thursday morning, rising 0.72% to 2,103.88 on the S&P Asia 50 ADR Index.

From North Asia, the gainers were led by the pet-focused platform Boqii and internet and data center provider VNET Group , which climbed 19.8% and 11.8% respectively. They were followed by mobile app developer Cheetah Mobile and streaming service iQIYI , which rose 4.4% and 2.6% respectively.

The decliners from North Asia were led by automotive ecommerce platform TuanChe and ecommerce fashion platform MOGU , which fell 9.1% and 8% respectively. They were followed by brand platform Baozun and diagnostic imaging centers company Concord Medical Services , which dropped 9% and 5.9% respectively.

From South Asia, the only gainers were IT firm Sify Technologies and telecommunications operator PLDT , which were up 3% and 1.2% respectively.

The decliners from South Asia were led by tech conglomerate Sea and IT firm Wipro , which lost 1% and 0.4% respectively. They were followed by financial services company HDFC Bank and pharmaceutical company Dr. Reddy's Laboratories , which were off 0.5% and 0.4% respectively.

Asian equities traded in the US as American depositary receipts were slightly higher Tuesday morning, edging up 0.08% to 2,086.58 on the S&P Asia 50 ADR Index.

From North Asia, the gainers were led by computer hardware maker Canaan and polysilicon manufacturer Daqo New Energy , which climbed 10 % and 7.2%, respectively. They were followed by automotive e-commerce platform Cango and e-commerce brand platform Baozun , which rose 7% and 6.8%, respectively.

The decliners from North Asia were led by automotive e-commerce platform TuanChe and e-commerce fashion platform MOGU , which fell 9.2% and 8%, respectively. They were followed by fintech firm Jiayin Group and brand platform 36Kr K, which dropped 6.8% and 3.9%, respectively.

From South Asia, the gainers were led by telecommunications operators Telekomunikasi Indonesia and PLDT , which were up 1.7% and 1% respectively. They were followed by pharmaceutical company Dr. Reddy's Laboratories and IT firm Sify Technologies , which increased 0.7% and 0.3% respectively.

The only decliners from South Asia were IT firm Infosys and financial services company HDFC Bank , which were off 0.2% and 0.03% respectively.

Andrew Bary

Subaru has a cult following among U.S. auto buyers who like its rugged, all-wheel-drive cars like the Forrester, Outback, and Crosstrek.

The well-managed Japanese auto maker produces about a million cars annually. About two-thirds of its sales are in the U.S. with less than 10% in its home country.

It has an inexpensive stock and investors could benefit from further consolidation in the Japanese auto industry — a trend that may be getting under way given talks between Honda and the smaller Nissan.

Subaru's U.S. shares ( FUJHY) trade around $8, down 8% this year and half of where it stood 10 years ago. The more active Japanese shares trade around 2,600 yen. Each U.S. share is equal to two Japanese shares.

"It's profitable and grossly overcapitalized and trading for around five times earnings," says Matthew Fine, a portfolio manager for the Third Avenue Value Fund, which holds the stock.

The company has a market capitalization of around $12 billion and is sitting on about $7 billion of net cash, meaning investors are paying little for its car business which is expected to earn about $2 billion in the current fiscal year ending in March. Subaru trades for about 70% of book value and the stock yields about 4%.

Fine notes that Subaru has a long history of profitability. Most of its cars sold in the U.S. are produced at a plant in Indiana and the company's CEO Atsushi Asaki said recently that the company has room to increase U.S. production if President-elect Trump decides to impose a uniform 10% tariffs on imports.

The company has a loyal group of U.S. buyers who tend to live in the Pacific Northwest or Northeast and often are safety conscious.

Among the knocks against Subaru is that it — like some other Japanese auto makers — doesn't have a well-defined strategy for potentially transitioning to electric vehicles. The company has set a target that 50% of 2030 sales would be all-electric cars and is spending about $10 billion on electrification initiatives by 2030.

Fine says that the company aims to preserve its options, noting that electric vehicle sales have stalled at around 10% of U.S. sales and are near zero in Japan.

The Japanese auto industry is divided into spheres led by Toyota and Honda, the two major producers. Honda is pursuing a link with Nissan while Toyota owns a 21% stake in Subaru, as well as having an interest in Mazda.

Subaru's Crosstrek is similar to the Honda CRV and Toyota RAV4 crossovers with the Crosstrek having standard all-wheel drive and a higher ground clearance.

Fine says it's possible that Toyota, which sells about 10 times as many cars as Subaru and is valued at more than $200 billion, could seek to buy Subaru.

"We acknowledge the possibility that ... Toyota could acquire Subaru and its valuable niche brand to substantially enhance significant synergies already being capitalized upon through existing partnerships and collaboration," Fine wrote in a shareholder letter in October.

A weak yen has depressed the U.S.-listed Subaru shares but the yen could be bottoming

Auto stocks are cheap around the world with companies like Mercedes-Benz Group and BMW sitting on a lot of cash and other assets while trading for just six times forward earnings. Tesla's market value of $1.4 trillion is more than the rest of the industry combined and it trades for over 100 times forward earnings largely on autonomous driving hopes.

But Subaru has a distinctive brand, a loyal American customer base, a great balance sheet, a cheap stock and potential takeover value in an auto industry that could see greater consolidation in the coming years.

Write to Andrew Bary at andrew.bary@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

Consumer stocks were mixed late Monday afternoon, with the Consumer Staples Select Sector SPDR Fund (XLP) down 0.5% and the Consumer Discretionary Select Sector SPDR Fund (XLY) adding 0.4%.

In corporate news, the Consumer Financial Protection Bureau said it has sued Walmart and Branch Messenger for allegedly forcing delivery drivers to use "costly" deposit accounts to get paid. Walmart shares were falling 2%.

Honda and Nissan said they have signed a memorandum of understanding to discuss the possibility of a merger and the creation of a joint holding company. Honda shares jumped 13%.

Nordstrom agreed to be taken private by members of the founding Nordstrom family and Mexican retailer El Puerto de Liverpool in a deal valued at $6.25 billion. Nordstrom shares fell 1.6%.

Hyatt Hotels is in exclusive talks to potentially buy Playa Hotels & Resorts , among other options being considered for the operator of resorts in Mexico, Jamaica and the Dominican Republic, the companies separately said on Monday. Hyatt shares were down 1%, and Playa surged 27%.