Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on PEUGEOT SA. We currently have 23 research reports from 1 professional analysts.
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Research reports on
OPEL/Vauxhall takeover without proper due diligence?
06 Mar 17
PSA will buy 100% of the company’s production plants for €1.32bn and the financing arm’s 50/50 joint-venture with BNP Paribas* will buy OPEL’s financing activities for €0.9bn, i.e. PSA’s cash payment will amount to €1.87bn. This will be financed by cash (c. €1.1bn) and by warrants issued to GM (€0.65bn). The issue of the warrants has to be approved by the upcoming AGM on 10 May and, if the issue is rejected, PSA will pay this amount over a period of five years. The warrants carry a reference price of €17.34 and if these are converted into PSA shares, GM has agreed to sell the shares within 35 days after the exercise date. *most other financing activities are joint-ventures with Santander Consumer Finance.
First 2016 indications are good, but future margin to be lower
23 Feb 17
PSA seems to have delivered what we had expected and a bit more. The dividend of €0.48 (we had expected €0.30) is the major and positive surprise. Car deliveries of 3.15m were in line with our projections while consolidated revenue of €54bn was just ahead of our €53bn. Operating income of €2.61bn is about €100m higher and net earnings after minorities of €1.73bn are €63m higher. In fact, net earnings were only up as tax charges fell from €706m in 2015 to €517m, while at-equity profits were also down from €437m to €128m. In 2015, at-equity earnings from China alone were €300m.
One of the worst takeover mistakes
20 Feb 17
… is to keep the management team of the target unchanged. Takeovers are often unsuccessful and one mistake in these instances has been not to change management. PSA seems to be willing to make this mistake simply to keep German politicians and unions calm. In fact, Opel’s CEO has indicated that the company will stay independent from the parent company, at least for a while. But this management team has shown in the past that it cannot turn Opel around. One might argue that this is the result of GM’s policy to prohibit Opel from selling its cars, in sizeable quantities, outside Europe. However, this is only half of the problem. The other is that the car producer has not been able to turn its bottom line around at a time when the European market was booming, i.e. either costs were too high or prices too low. What is going to happen if demand softens again? The competition in prices will then intensify yet again and Opel’s losses will rise. As PSA is also not immune to this (both are selling the same types of cars and are going for the same clients), the combined group is likely to experience another severe setback.
PSA willing to buying an asset-light company?
14 Feb 17
Rumours suggest that PSA is interested in buying Opel/Vauxhall from GM. At the beginning of the current decade, it was Magna that was interested but finally gave up. The reasons were manifold: the target was not allowed to sell its cars outside Europe and the company was not the owner of its own name and not of any patents. These were owned by GM and the parent company was not willing to give these rights up.
Asian business needs to be refocused
25 Jan 17
Except for Iran, PSA showed a dismal performance in Asia in 2016. Deliveries fell by 16% to 618,352 vehicles in China and 16% to 19,886 in India & Pacific. To improve penetration in the Indian market, PSA has now signed a cooperation agreement with CK Birla Group which is expected to start producing in 2020. PSA’s initial investment will be €100m. The first joint-venture will be holding a majority stake in a joint subsidiary with ‘HMFCL’ which will produce cars for distribution in India (initial capacity of 100,000 units). This partner is currently a joint-venture partner of Mitsubishi. The second 50/50 joint-venture is with ‘AVTEC’ and this will produce powertrains. CK Birla was known as Hindustan Motors which went bankrupt in 2013.
Falling deliveries in a booming market
11 Jan 17
Thanks to the inclusion of 233,000 vehicles produced by a joint-venture in Iran, PSA shows delivery growth of 5.8% to 3.15m vehicles for 2016. Excluding this number, deliveries were down by 2% to 2.91m. With the exception of Europe (+3.6% to 1.93m) and LatAm (+17% to 183,907), the regional picture shows falling numbers everywhere else when Iran is excluded. In fact, with a delivery fall of 16% to 618,352 in China & Southeast Asia, the group’s foothold seems to be coming under intensifying pressure there. We had expressed our doubts whether Dongfeng is the right partner to bring PSA’s Chinese position forward. This performance is the more disappointing when looking at the Chinese market growth rate of more than 15% in 2016. Unfortunately, the group is not giving any explanation for the European discrepancy between registrations and deliveries. Through to November 2016, registrations were up by only 0.8% to 1.37m vehicles in the EU and EFTA countries and the performance was not much different in Europe’s largest markets in December (full-year European numbers will be out on 17 January). As a result, we believe that PSA’s inventory has increased considerably at the dealer network.
Outperformance in the bag
24 Mar 17
IG Design has had a very good second half trading and has issued a year-end update indicating that numbers will exceed market estimates. We have lifted our FY17 and FY18 numbers by 8-10% at the pre-tax and EPS levels, following an 11% uplift to earnings with the interims. Particularly notable is the comment on strong cash flow, with the group reaching its target of average leverage less than 2.5x EBITDA two years ahead of plan. With the earnings and cash flow momentum, strong balance sheet and progressive dividend, there is good potential for further share price upside.
24 Mar 17
We note the share transaction yesterday, and think the stock will benefit from the increased liquidity. We continue to believe there is good valuation upside to the shares. However, we are terminating coverage of Watkins Jones from this morning and withdrawing our forecasts from the market.
Management hopes for a better 2017
21 Mar 17
BMW’s final 2016 accounts were, compared to what we had anticipated, slightly disappointing. We had said so when preliminary numbers were released earlier this month. Today’s guidance for 2017 shows slight growth in all categories, i.e. volume, revenue and consolidated pre-tax earnings are all projected to go up. Reading between the lines, the statement suggests that the EBIT margin generated by the Automobiles division is likely to fall further (it was down from 9.2% to 8.9% in 2016). Whether Financial Services can again increase its margin (it was up by 0.1pp to 8.4% last year) remains to be seen and will also depend on the price development of used vehicles.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.