Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Faurecia. We currently have 17 research reports from 1 professional analysts.
Consolidated revenue was up by 6.6% to €4.52bn which brought the 9M number to €14.81bn, an increase of 7.6%. We had expected turnover of €14.75bn, i.e. the reported number is only marginally ahead of our projection.
Mahle (annual turnover of a good €12bn), controlled by the MAHLE-Stiftung GmbH, and Faurecia (revenue of some €20bn) will join forces to develop innovative interior thermal management technologies. These are necessary for electric vehicles so that energy consumption for air conditioning systems is limited or reduced more. Faurecia is a producer of complete interior systems (c. 25% of total revenue) while Mahle concentrates on the powertrain and engine peripherals (40% of its consolidated turnover) and air conditioning systems (c. 35%).
Faurecia’s revenue increased by 8% to €10.3bn in H1 17 whereas we had projected €9.92bn. Simultaneously, EBIT and net earnings were up by 20% to €587m and 28% to €314m, respectively. Our numbers were €529m and €252m, i.e. the company did clearly better than we had anticipated.
Very strong growth in LatAm (+45% organic and +73% on a reported basis to €168m) and also in APAC (+17% to €688m) have allowed Faurecia to increase its ‘Value-added’ revenue by 9.8% organically and by 10% on a reported basis to €4.23bn. Fully-consolidated sales (i.e. including monoliths) were up by 9.3% to almost €5.1bn. Seating and Interior both increased their revenue by a good 11% (organically) to €1.79bn and €1.32bn, while Emission Control (now called Clean Mobility) saw a 5.5% increase to €1.12bn. Management mentioned new programmes for Ford and BMW which strongly supported Seating sales while Clean Mobility benefited from strong demand from truck manufacturers which includes Cummins, the engine manufacturer, a name that was explicitly mentioned. Interiors benefited from the first-time consolidation of two joint-ventures. One is with FCA in Brazil and the other with Chang’An in China. Based on the above numbers, management sees ‘Value-added’ revenue increasing by 6% on an organic basis in 2017 and the EBIT margin to come inbetween 6.4% and 6.8%. However, these latter numbers do not take monolith revenue into account. Finally, the EPS number is expected to be around €4.
Consolidated revenue was unchanged at €18.7bn whereas EBIT increased by 17% to €970m. Both of these numbers are almost exactly in line with our projections. Net income of €638m (+72%) is clearly lower than our expected €710m. In spite of this, the dividend will be raised to €0.90 (+38%) vs. our anticipated €0.80.
Faurecia had a 42% stake in Danish Amminex Emissions Technology A/S, a company founded in 2005. It has developed an Ammonia Storage and Delivery System (ASDS) which, according to the company, almost completely eliminates NOx pollutants (99%) from any diesel engine. Faurecia is now increasing its stake to 91.5%.
The company has entered into exclusive negotiations with Parrot Automotive, a French company involved in infotainment and connectivity solutions for the auto industry. Faurecia’s ultimate aim is to control Parrot fully. The first step will be an initial Enterprise Value investment of €20m which will give it a 20% stake. In addition, it will subscribe to a convertible bond that allows it to increase its stake to 50.01% in 2019. By 2022, Faurecia would be allowed to own all of Parrot’s equity.
Consolidated sales fell by 1.9% to €4.24bn in the last quarter thus translating into 9M turnover of €13.77bn, a fall of 0.3%. Management blames the currency movement for this disappointment, which is a good €130m below the consensus median and slightly short of €90m below our expectation.
Consolidated sales increased by 0.5% to €9.53bn but EBIT was up by 28% to €490m and net earnings by 56% to €245m. While the revenue number is slightly lower than our projected €9.68bn, the two profit numbers are clearly higher (€437m and €195m, respectively). As a result of these good profit numbers, management raises its full-year operating margin guidance from ‘4.6-5.0%’ to a ‘minimum of 5.0%’.
Simultaneously, it sees the EBIT margin reaching 6% in two years’ time. To achieve this, Faurecia intends to ‘expand its technology offer focused on the industry megatrends and on environmental protection’. It intends to ‘rapidly expand those product lines with strong technology content where margins and growth rates are significantly above the group’s average’.
Faurecia is only consolidating a minor activity of Exterior in 2016 as the remainder has been sold to Plastic Omnium. As a consequence, it has restated its 2015 numbers. Based on this new revenue number of €4.65bn (instead of last year’s stated sales of €5.14bn), revenue was up by 0.1% to €4.66bn. On a like-for-like basis, sales increased by 4.4%.
Starting on 1 July 2016, the positions of the CEO and the Board’s Chairman will be split. Yann Delabrière, currently occupying both positions, will become the Chairman of the Supervisory Board and Patrick Koller, currently the group’s COO and EVP Automotive Seating, will become the CEO. We very much appreciate this decision as will, most likely, some (or most?) of Faurecia’s clients. The company continues to be controlled by Peugeot but the helm of the management team is no longer occupied by a former Peugeot manager. Consequently, if auto manufacturers other than Peugeot feared of the passing on of know-how to Peugeot in the past, this threat, even if it was very unlikely and only theoretical, is diminishing.
Faurecia’s revenue and profit numbers (except for net profit) are above our projections and also above consensus numbers. As management expects further revenue and profit margin growth in 2016, it proposes a dividend of €0.65 (€0.35 was paid for 2014) instead of our envisaged €0.50. The group increased sales by 10% to €20.7bn (we had expected €20.3bn) and EBIT by 36% to €913m (our projection was €840m). Net profit after minorities amounted to €370m (€371m was our forecast), an increase of 123%.
This division, which primarily produces bumpers and front-end modules, will be sold to Compagnie Plastic Omnium for an enterprise value of €665m during the course of 2016. The division showed sales of €2bn in 2014 and an EBIT of €54m. Faurecia will initially repay net debt but intends to eventually invest the proceeds in value-added technologies of its other three divisions.
The following is the summary of today’s report in FAZ: Without giving any notice to the public, Faurecia Automotive GmbH, the German subsidiary of Faurecia, has lost its Chairman of the Supervisory Board, Thomas Sattelberger. VW is Faurecia’s single most important client (a good 20% of revenue) and Sattelberger had publicly stated that Winterkorn should leave the company just a few days after the diesel scandal came to the surface. In mid-October he called VW an ‘authoritarian regime’ and the new CEO Müller and Chairman of the Supervisory Board Pötsch ‘co-perpetrators of the ancient regime’. Finally, he called the powerful Head of VW’s work council Osterloh a ‘covert CEO’ and a ‘whip’. All of this seems to have been enough to let him go. We agree with his views and do not accept the CFO having become the Chairman of the Supervisory Board in one step. Müller has run Porsche before and although this subsidiary is also involved in cheating emissions, he has been sold to the public as being capable of cleaning up the mess. In fact, both Müller and Pötsch have closely cooperated with Winterkorn for several years. However, Faurecia has done well in this ‘cosy’ environment. The company was and is willing to sponsor VW’s Bundesliga club VfL Wolfsburg by providing the team seats with Faurecia’s logo prominently presented. As Faurecia is hardly selling any of its products directly to consumers, these ‘advertising’ costs do not make a lot of sense, except if VW has requested this ‘investment’.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Faurecia. We currently have 17 research reports from 1 professional analysts.
Housing, as expected, was front and centre of yesterday’s budget and the removal of stamp duty for most first time buyers dominates today’s headlines. In our view, this will make a difference (despite a very pessimistic analysis by the OBR) but it does not address the chronic undersupply of affordable housing in England. An additional £15bn has been made available with the intention of doing just that by stimulating supply of new housing to a level not seen for almost 50 years. If this is to be achieved, it will require more land to be made available as well as innovative methods of housing delivery. For the volume housebuilders, the budget represents something of a mixed bag: help to buy preserved but lower UK growth forecast; relaxed planning rules but the threat of government intervention to prevent land banking. That said, we consider it a positive budget for MJ Gleeson whose unique positioning we have championed for some time. We remain of the view that no listed housebuilder is better aligned to political housing priorities in England.
Companies: MJ Gleeson Sigma Capital Group
PHTM is at an inflection point. We see new technology and rapid expansion in a complementary segment as key factors behind an imminent step-up in profit growth. The stock also provides a substantial level of exposure to recovering European economies, especially France (c45% of PBT). In our view, consensus significantly underestimates these improving profit dynamics and emerging growth in Photo/ID, Laundry & Kiosks. Our base case assumes a 3-yr EPS CAGR of 10% (vs cons c5%) and our analysis suggests scope for this to be 18-23%. We initiate with a 225p target price and highlight a 2-3 year bull case of 350p (10x cal20 EBITDA). Interims are on 11 Dec.
Companies: Photo-Me International
This quarter we use finnCap’s Slide Rule to provide both top-down and bottom-up analysis of the UK’s Technology and Telecoms sectors. Our findings are very reassuring: the Tech sector scores the best (across all sectors) when considering Growth and Quality – Taptica*, Frontier Developments* and dotDigital* in particular stand out on these metrics. Given these attractive characteristics and growth prospects, the Tech sector is unsurprisingly one of the most expensive – currently trading at 17.2x FY1 EV/EBIT and 23.8x FY1 P/E, versus 15.0x and 18.5x respectively for the wider market. Despite valuations appearing high, we believe there are value opportunities. For example, Proactis* features in finnCap’s QVGM+ portfolio (ranked 17/462) – the company offers attractive organic and inorganic growth, with earnings forecast to grow by 26% CAGR over the next two years, but despite this, only trades on 15x FY1 earnings and offers 8% FCF yield in FY2.
Companies: 7DIG ALT AMO ARTA BOTB BLTG CTP CFHL CYAN ISL DTC DOTD ELCO ESV FDEV GBG IDEA IDOX IMTK IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET ONEV PHD QTX QXT RCN 932 SSY SEE SIM SPE SRT STR TAP TAX TEP TPOP TRAK UNG VIP ZOO
FY17 results are another positive profit surprise, with adj. EBITDA of £13.1m vs our expectations of £12.3m. We therefore raise our recently upgraded FY18 EBITDA estimate by a further 5% to £13.7m to reflect the combination of rolling-over the FY17 ‘beat’ and management’s commentary around current trading/momentum. Since its IPO in December 2014, TUNE has demonstrated its ability to grow EBITDA (FY15-17 CAGR of +19%), thereby continuing its impressive longer track record of unbroken revenue growth (+28% CAGR) and EBITDA growth (+33.5% CAGR) since FY09. The divi of 2.7p has grown +50% since FY15, also helping to drive TUNE’s share price to >300p from the 126p IPO price. And there is still much more to come, in our view. The new CEO is building on TUNE’s undoubted new product innovation prowess, firstly through the increased commercialisation of TUNE’s product initiatives that has been a key feature of FY17, and, secondly through a multi-faceted expansionary strategy (i.e. entering new categories and markets) in the coming years. We raise our TP to 365p (from 345p). Maintain BUY.
Bagir Group (BAGR LN) Exciting strategic partnership proposed and $16.5m investment | blur Group (BLUR LN) Trading update – making progress | Cineworld Group (CINE LN) On track to deliver double-digit EPS growth for the year | Housebuilding Weighing up the housing budget | Liontrust Asset Management (LIO LN) Strong earnings growth post-ATI completion, MiFID II impact quantified | Mobile Streams (MOS LN) Full year | Servelec Group (SERV LN) Bid to take private | Severfield (SFR LN) Upgrading forecasts after a strong set of interims
Companies: LIO GLE MOS SGM BLUR CINE BAGR SERV SFR
Victoria has acquired Keraben Grupo S.A. a high-margin European manufacturer of mid-high end branded floor and wall ceramic tiles. Keraben is forecast to have a material impact on profitability and we now forecast 25% 3-year adj. EPS CAGR compared with 18% pre-acquisition.
Carador Income Fund (CIFU LN) New wave of US$200bn CLO repricing approaching | mporium Group (MPM LN) New IMPACT win with eCommerce fashion company | Photo-Me International (PHTM LN) (video Summary) Snap it up | Scapa Group (SCPA LN) Interims in line | Severfield (SFR LN) Strong interim results lead to upgrades | Vp (VP/ LN) Another period of significant growth
Companies: CIFU VP/ SCPA MPM SFR PHTM
We have refreshed our quality style screen for the first time since its inception in February this year. As before, the screen selects the 25 stocks exhibiting the highest quality characteristics according to our criteria from our universe of approx. 500 stocks and we have chosen 10 stocks to focus on. Since inception the screen has significantly outperformed the main small-cap index and marginally outperformed the microcap index. There was notable volatility around the UK general election, which is interesting as quality would usually be seen as a defensive style in large-caps. As expected, turnover of constituents is modest with only 9 leavers and joiners despite the extended time-scale since inception. We will refresh again in five to six months’ time.
Companies: WIL GHT AVON CHH ZYT DOTD MAB1 GTLY FCRM VANL
Belluscura— Provider of premium medical devices at value prices to address part of the global unmet need for affordable, premium quality medical devices. Raising £7.5m to £10m. Offer TBA. Due early Dec Miriad Advertising—Global video advertising company incorporated in 2015 and is engaged in the development of native invideo advertising . 2016 rev £0.7m and £7.3m operating loss. Offer TBA Keystone Law Group— full service law firm with over 250 self-employed lawyers . Due 27 Nov. Raising £10m at 160p. Mkt Cap £50m. Revenue of £25.6 million and EBITDA of £2.1 million. In FYJan17. Beeks Financial Cloud -niche cloud computing and connectivity provider for automated (algorithmic) trading in Forex and Futures financial products . Raising £7m. Mkt Cap c.£24.5m. Due 27 Nov. FYJun17 rev £4m. Profitable at operating level. City Pub Group - owner and operator of an estate of 34 premium pubs across Southern England. £30m raise. Consistent track record of strong revenue and EBITDA growth, with a three year CAGR from FY14 to FY16 of 34.9% and 44.8% respectively, and an EBITDA margin of 14.7% in FY16. Due late Nov. Offer TBA. Ten Lifestyle Hldgs. Technology-enabled lifestyle and travel platform providing trusted concierge services to the world's wealthy. Net revenue increased from £20m in the year ended 31 August 2015 to £33m in the year ended 31 August 2017, a compound annual growth rate of 29%. Offer TBA, expected 27 Nov 2017. OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. OG Graphite, brownfield development-stage graphite company focused on the reactivation of its wholly-owned Kearney natural flake graphite mine and mill located 280 km north of Toronto, Canada. Offer TBA, expected mid November.
Companies: CYAN TAL HAYD ING SHG BAGR MXCP ACC
GKN has issued another warning in relation to its Aerospace US business. A review of working capital has been initiated across all Aerospace plants in North America. While this review is not yet complete it is likely to result in a further write-off estimated to be between £80m and £130m, much of which built up before 2017. We cut our EPS forecast for 2017 to 23p and we now expect no final dividend to be paid. Our new target price is 230p (300p).
InnovaDerma* (IDP): AGM update (CORP) | Fulcrum (FCRM): On track for increased asset ownership (BUY)
Companies: Innovaderma Fulcrum Utility Services
Hard to believe but we are only days away from the big event. As the nation awaits the Chancellor’s Autumn Budget and the delights of the Red (Magic) Box, the smaller companies community view this as just a preamble to the headline act - The Growth Companies Seminar - due on 30 November. With only 25 share buying days left to Christmas what better excuse to escape to the West End to pick up some (share) bargains. In Share News & Views, we comment on recent news from AdEPT Telecom, Cropper (James)*, EU Supply*, Norcros, Quarto Group*, Verditek* and Warpaint London*.
Companies: APC BMS CRPR ECSC EUSP FDM GETB PCF SNX SPRP SQS TCN W7L
In the October edition of the Hardman Monthly newsletter, Chief Executive, Keith Hiscock analyses the much misunderstood – but highly important – issue of stock liquidity. In particular, he focuses on the lower echelons of the Main Market and of AIM.
Companies: OPM ABZA AVO AGY APH ARBB AVCT BUR CMH CLIG COS DNL EVG GTLY MCL MUR NSF OBT ODX OXB NIPT PHP PURP RE/ RGD SCLP SPH SCE TRX VAL
‘The $64,000 Question’
Companies: ABBY BDEV BWY BKG BVS CRN CSP CRST GLE INL MCS PSN RDW TW/ TEF WJG
Belluscura— Provider of premium medical devices at value prices to address part of the global unmet need for affordable, premium quality medical devices. Raising £7.5m to £10m. Offer TBA. Due early Dec Miriad Advertising—Global video advertising company incorporated in 2015 and is engaged in the development of native invideo advertising . 2016 rev £0.7m and £7.3m operating loss. Offer TBA Keystone Law Group— full service law firm with over 250 self-employed lawyers . Due 27 Nov. Raising £10m at 160p. Mkt Cap £50m. Revenue of £25.6 million and EBITDA of £2.1 million. In FYJan17. Beeks Financial Cloud -niche cloud computing and connectivity provider for automated (algorithmic) trading in Forex and Futures financial products . Raising £7m. Mkt Cap c.£24.5m. Due 27 Nov. FYJun17 rev £4m. Profitable at operating level. City Pub Group - owner and operator of an estate of 34 premium pubs across Southern England. £30m raise. Consistent track record of strong revenue and EBITDA growth, with a three year CAGR from FY14 to FY16 of 34.9% and 44.8% respectively, and an EBITDA margin of 14.7% in FY16. Due late Nov. Offer TBA.
Companies: FRR BOD SKIN ARTL AGTA BMN MERC ANGS WAND WAND SIM