Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on VALEO SA. We currently have 12 research reports from 1 professional analysts.
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Valeo and Siemens start joint-venture
02 Dec 16
In April 2016, the two companies had announced their intention to form a joint-venture in high-voltage powertrains for on-road vehicles. This 50/50 operation is now starting with Valeo contributing its high-voltage power electronics, range extenders, and charging solutions, whereas Siemens supplies the car industry with e-motors and power electronics. The two companies believe that demand for these products will increase by 20% annually through to 2020. As the joint-venture is equally owned by the two companies, neither will fully consolidate the accounts but via at-equity. However, it will be small initially and start with some 1,000 employees.
Valeo intends to increase its Ichikoh stake
22 Nov 16
Valeo holds a 31.6% stake in the Japanese lighting company and intends to increase it to at least 50.09% or to a maximum of 55.08%. It is offering Y408 per share (25% premium to yesterday’s closing price) and the purchase price will be between €61m and €78m, i.e. it will be relatively small. The offer will last from 24 November through to 12 January of next year. The deal will allow Valeo to consolidate Ichikoh fully but will leave a reasonable free float for the listing on the Tokyo stock exchange.
H1 16 has been exceptionally good
27 Jul 16
Valeo’s H1 numbers are clearly better than we had expected. In fact, revenue growth accelerated from +9% in Q1 to +13% in Q2, which brought the total to €8.13bn. Simultaneously, H1 EBIT and net earnings increased by 20% to €647m and by 23% to €422m, respectively.
Non-dilutive cash-settled convertible bond issue
09 Jun 16
To finance some of the upcoming purchase price for the takeover of FTE automotive, the company has issued a $450m convertible bond. The details can be found below. Valeo’s press release: Paris, 9 June 2016, Valeo announces today the launch of an offering of non-dilutive cash-settled convertible bonds due 2021 (the “Bonds”) with a nominal amount of USD450m. As conversion rights in respect of the Bonds will only be cash-settled, the instrument will not result in the issuance of new shares or the delivery of existing shares of Valeo upon conversion. Concurrently, Valeo will purchase cash-settled call options over its own shares to hedge its exposure to pay cash amounts upon any potential exercise of conversion rights embedded in the Bonds. This USD-denominated debt will be immediately converted into euros. The net proceeds of the Bonds offering will be used for general corporate purposes and to finance the acquisitions announced recently. The Bonds will not bear any interest. The Bonds will have a nominal value of USD200,000 per Bond. The Bonds will be issued with an issue price of 100% to 104% of nominal value, corresponding to an annual gross yield to maturity of -0.78% to 0.00%. The Bonds’ initial conversion price will represent an issue premium of 45% above the reference share price for Valeo share, which will be determined as the arithmetic average of the daily volume-weighted´average prices of Valeo share on the regulated market of Euronext in Paris (“Euronext Paris”) over a period of 10 consecutive trading days, starting on 10 June 2016 (the “Reference Period”). The reference share price, the initial conversion price and the initial conversion ratio will be announced by Valeo on or around 23 June 2016. The initial conversion ratio of the Bonds will correspond to the nominal value converted in euros and divided by the initial conversion price. The final terms of the issuance are expected to be announced today, except for the initial conversion price and the initial conversion ratio. Settlement and delivery of the Bonds is expected to take place on 16 June 2016. If not converted or redeemed earlier, the Bonds will be redeemed at nominal value on 16 June 2021.
Panmure Morning Note 01-12-16
01 Dec 16
Consistent with the FY16 trading update/pre-close on September 14, today’s FY16 results are in line with our and consensus underlying PBT expectations of £12.5m (+22.5% YoY). The total FY16 dividend is up 36%, covered 3.4x, whilst net cash is £6.9m (+53%). FY16 represented another good year of execution, and FY17 has started well. The company's business mix is now more diverse across geographies (International accounted for 26% of total sales vs 21% in FY15) and we see CCT’s increasing diversity in retail distribution as both a further risk-mitigation and opportunity driver. We make no changes to our FY17 and FY18 PBT forecasts of £13.5m and £14.5m (albeit, we make some changes to the constituent parts) and introduce a FY19 PBT of £15.5m. We maintain our BUY and TP of 635p.
Strong H2 expected
30 Nov 16
H1 results were in line with expectations with PBT of £9.0m, EPS of 9.9p and DPS of 7.2p. The NAV / share is 253p. We expect the company to have a strong H2 based on its forward sales position and the timing of developments coming through. Telford has a strong balance sheet, a large development pipeline and impressive forward sales position, as well as good levels of demand for its product and geography from a diverse group of buyers. No change to forecasts at this stage.
Civil: No Reflation here, only a Race to the Bottom
05 Dec 16
The strengthening of the US dollar since the election of Trump is adding to the headwinds in the airline industry: over-capacity and falling yields. The airline industry, which is expected to generate $8bn of free cashflow in 2016 on $600bn of capital employed, needs to spend $120bn annually to maintain current delivery rates. Deferrals and down-gauging is now spreading to narrow-bodies as more and more airlines review their capex plans. We expect acceleration of seat densification as airlines look to sweat their existing fleets. We now expect deliveries to fall by 5% over 2015-18 as opposed to our previous forecast of flat growth. Aftermarket may also suffer as seat densification helps cut number of flights. This leads to reduction in our EPS forecasts for key Civil Aerospace names: Rolls-Royce, Meggitt, GKN and Senior.
Joy of Techs
21 Nov 16
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
Forward sale of two developments increases forecast visibility further
01 Dec 16
We note Watkin Jones’ announcement today confirming that the company has forward sold another two developments, in Cardiff and Belfast, to institutional investors. We leave forecasts unchanged but acknowledge that these further sales increase the visibility on earnings. We now assume c.65% of FY17 gross profit is derived from projects that have been forward sold. We continue to believe the shares are undervalued given the high levels of earnings visibility that the forward sales model generates, the low leverage risk with in excess of £30m of net cash and the structural growth in both Purpose Built Student Accommodation (PBSA) and the Private Rented Sector (PRS). On FY16 earnings, which the company confirmed are in line in its recent trading update (17th November), the shares trade on 9.6x. This falls to just 8.7x in FY17 with c.65% visibility after just two months of the financial year. We would hope that almost all of FY17 earnings will have been forward sold by the half year end mirroring the experience in FY16. The prospective yield of 5.3%, twice covered by earnings and underpinned by a strong balance sheet, remains attractive.
FY16 ahead of expectations; leads to upgrades across the forecast period
01 Dec 16
The ten-month trading statement released this morning indicates that trading has remained solid post the interims and FY16 results will be ahead of market expectations. As a result, revenue forecasts increase 2.1% in FY16 to £689.0m (prev. £674.9m). The August price increase on stable volumes lead to increased margin assumptions magnifying the impact on profitability with PBT increasing 4.2% to £37.5m (prev. £35.9m). Conservatively, FY17 and FY18 forecasts increase in line with previous growth assumptions off the higher base in FY16. This approach is prudent in the face of continued currency volatility and low visibility on UK consumer spending into FY17. The referendum could have been a major headwind with c. 60% of COGS sourced in Euros. That Headlam has been able to offset the impact with price rises that have had little impact on volumes highlights the resilience of the business model and its market leading position in the industry. Looking forward the UK consumer will remain key to its performance. However, forecasts assume just 1% revenue growth in FY17 and FY18 and operating margins remain well below the historic peak offering the potential for operational improvements to offset any top line weakness.