TOKYO, Oct 24 (Reuters) - Shares in Calsonic Kansei Corp and other Japanese auto part makers cruised higher on Thursday after a dazzling earnings report from Nissan Motor Co Ltd bolstered investor hopes for industry demand.
Calsonic, a maker of radiators, air conditioners, mufflers and other parts for Nissan, rose 2.95 percent to 663 yen, one yen below a five-year high. That outperformed a 1.15 percent fall in the Nikkei average , which is hovering at 19-year lows.
After the close on Wednesday, Nissan said that attractive new models and aggressive cost-cutting helped it beat market expectations for the first half. Japan's third-largest automaker also forecast another record operating profit for the full year.
Nissan's stock rode the profit outlook to the 1,000 yen mark for the first time in five months during Thursday trade. It ended the session six percent higher at 990 yen.
"Nissan's results don't significantly change the big picture, but as long as the market smiles on Nissan, shares in Nissan's suppliers should also get a boost over the short term," said Kunihiro Matsumoto, car parts analyst at Deutsche Securities.
Car assembler Nissan Shatai Co Ltd jumped 2.63 percent to a year high of 508 yen. Kayaba Industry Co Ltd , Japan's top maker of hydraulic shock absorbers, closed up 0.71 percent at 283 yen after hitting a 2002 high of 293 yen.
Nissan Shatai and Kayaba are among the many car parts makers to have recently raised earnings forecasts for the current year, reflecting strong exports of cars to the U.S. which have made up for slack demand at home.
On Thursday, Japan's top automakers all reported double-digit rises in global production for September. Following Nissan, Toyota Motor Corp and Honda Motor Co are set to post record profits for the first half at the start of next week.
The auto industry is one of the few sectors enjoying rosy profits in Japan, where a shaky economy and poor consumer sentiment have taken their toll.
PEAK MAY BE NEAR
Even so, fund managers warn the high-flying rally for some auto parts shares may be coming to an end.
Oil seals maker NOK Corp has almost tripled since the start of the year, ending Thursday up 1.34 percent at 1,510 yen.
"Sales momentum is slowing and the good earnings results have been almost completely priced in," said Takehiko Takachio, senior portfolio manager at Kokusai Asset Management.
"Given a lack of viable alternatives, relative performance in auto parts stocks may be decent, but you shouldn't expect much in terms of absolute performance from here."
Takehiko said attractive valuations may draw investors to Honda and other blue chip auto makers instead. Heavy foreign selling knocked Honda to a 2002 low on October 10 and its price-to-earnings ratio (PER) is now at 11.
In comparison, NOK has a PER of 21 and Calsonic is at 25.
Hakan Hedstron, head of investment management at Commerz International Capital Management Japan, said his company recently sold its holdings of NOK on concerns it was overheated.
"We wanted to get out before too many people are fond of it," Hedstrom said, adding that Commerz still held shares in Nissan Shatai and Bosch Automotive Systems Corp , a car parts maker affiliated to Robert Bosch of Germany.
"We do not overweight the (auto parts) sector as we did earlier in the year. We have now switched more towards the big auto manufacturers," he said.