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Research Tree provides access to ongoing research coverage, media content and regulatory news on VOLKSWAGEN AG. We currently have 69 research reports from 1 professional analysts.
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Piech accuses Winterkorn of knowing about Dieselgate since early 2015
04 Feb 17
When asked by German prosecutors, Ferdinand Piech, the former Chairman of the Supervisory Board, said that he had asked the former CEO about the US investigations in February 2015. According to Piech, Winterkorn then answered that he was not aware of the diesel engine problems while Piech insisted that he had received information from internal VW sources. After the Geneva Automobile Show in March, he asked again Winterkorn but he was again rebuffed. Subsequently, Piech said that he was ‘at distance’ to Winterkorn and in April of that year Piech and his wife resigned from VW’s Supervisory Board.
New evidence found against former CEO Winterkorn
29 Jan 17
German investigators have raided various offices around VW’s headquarters and possibly also the private home of Winterkorn in Munich. In addition, the prosecutors have received information from the other side of the Atlantic Ocean which allows them to start prosecuting the former CEO and CFO Hans Dieter Poetsch as well as the Head of the VW brand Herbert Diess. The number of defendants has been increased from 21 to 37. VW’s market value fell by more than €40bn between Ferdinand Piech’s remark that he was ‘at distance’ to Martin Winterkorn in mid-April 2015 to mid-September of that year when the US authorities made their inquiry into Dieselgate public. The market value fell by another €30bn in the following two to three weeks. If it is proved that Winterkorn and Poetsch knew well before mid September about the issue, investors will have a good chance of being compensated. The State of Lower Saxony continues to reject any claims, but other shareholders have already claimed compensation. Whether this includes the Porsche/Piech family is unclear, but some members of the family clan are unlikely to accept the financial loss. Finally, it is uncertain what the Qatar Investment Authority will do. Assuming all core shareholders will not claim anything, but the freefloat of ordinary and preferred shareholders will ask for compensation, the amount will be between €14bn (the lost market value of their shares in the days after the announcement) and €35bn (the lost market value since Ferdinand Piech’s above-mentioned statement). The latter number wipes almost 50% off the group’s expected shareholders’ funds as of the end of 2016.
The storm (or hurricane?) has arrived
27 Jan 17
Christine Hohmann-Dennhardt is leaving the Management Board after one year of service. She was hired from Daimler as the person responsible for Corporate Governance. Hohmann-Dennhardt was a judge at Germany’s Constitutional High Court from 1999 to 2011 and Chief Compliance Officer at Daimler thereafter, before she was asked to help VW out of its dismal situation. The information given by the company suggests that she was unable to get along with VW’s ‘old-boys network’ or vice-versa. Another reason might be the Supervisory Board’s and the CEO’s decision not to make the report available to the public that was finalised by Jones Day, the law firm VW had engaged. VW had previously stated that this report would be published as soon as it was finalised. Assuming Hohmann-Dennhardt is asked to appear at court as a witness, she is very unlikely to lie about the findings of this report. As a previous judge at the Constitutional High Court, we expect her to support the court’s and the prosecutor’s investigation and to make details of the Jones Day report public.
Pressure on VW is mounting in Germany
18 Jan 17
VW seems to be trying to do whatever is possible to circumvent publicly revealing known compensation payments to German Dieselgate victims. Several courts have granted car owners the right to give their cars back to the dealers and other courts have rejected this. However, VW has always supported the dealers to the next court level. An indication by Oberlandesgericht Hamm, which appears to be in support of the client, has resulted in an off-court settlement between the dealer (i.e. VW) and the client. The two sides have agreed to maintain silence about the details. This way, VW avoids being sentenced by a court without giving any details on the settlement, i.e. other clients have to go to court as well without knowing what the final outcome will be. We wonder how long VW can follow this strategy without upsetting more consumers and potential clients.
VW pleads guilty in the US but innocent in Europe?
11 Jan 17
According to management, the company is in the final stage of settling the fine payable to Federal US authorities. The latest indication is a number of $4.3bn. This amount seems to be acceptable to the authorities under the condition that VW pleads guilty for having used cheating software that allowed it to defraud both US consumers and US laws. Further State fines have to be expected. Simultaneously, US authorities seem to have found evidence that top management was not only informed about the cheating devices but urged employees not to admit this fact to US authorities. According to this, both former CEO Martin Winterkorn and current VW brand head Herbert Diess are accused, although the latter only joined VW in July 2015, i.e. well after the mess occurred. In our opinion, this will also involve Hans Dieter Pötsch, the former CFO and the current Chairman of the Supervisory Board.
Dieselgate fine of $3bn?
07 Jan 17
According to the media (Wall Street Journal and Reuters), the DoJ is willing to accept a fine of $3bn from VW. This comes on top of the c. $17bn compensation payments to US clients who had bought VW cars with diesel engines and faked software. It is unclear whether this upcoming fine only concerns 2L diesel engines or also 3L engines. It is also unclear whether additional fines have to be paid by Audi and Porsche or whether the $3bn fine concerns all of the group’s brands. In addition, several States might sue the group for destruction of the environment.
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.
Root & branch review – early margin positive
23 Feb 17
Unilever (ULVR LN, HOLD, T/P 3800p) announced yesterday that it will publish the findings of a root and branch review in April 2017. This is stated as being a result of the recent approach made to them by KraftHeinz (KHC US, N/RO), an offer which quickly lapsed.
A compelling global brand roll-out story
22 Feb 17
We believe that SuperGroup remains one of the most undervalued global brand roll-out stories within the UK retail sector. The stock trades at c20% discount to its UK peers on a 1YF EV/EBITDA basis despite best-in-class revenue growth and profit margins. SuperGroup operates a leading multi-channel proposition, has strong sales momentum across each channel and forecast risk remains on the upside. We initiate coverage on the shares with a buy recommendation and price target of 1898p, implying upside of 27.8% over the prevailing market price.
Despite offer lapse, Unilever remains under pressure
20 Feb 17
Unilever (ULVR LN, HOLD, T/P 3800p) announced yesterday that it is no longer subject to a £40 per share offer from KraftHeinz, which valued Unilever at 14x EV/EBITDA and a 24x P/E ratio. The announcement was made jointly with Kraft Heinz. While the offer lapse will probably prompt Unilever’s shares to open lower – they rose 13.3% on Friday – longer term changes may be more positive.
13 Feb 17
Surface Transforms* (SCE): H1 results confirm operational progress (CORP) | Premaitha Health* (NIPT): European diagnostics partnership (CORP) | Lok'nStore* (LOK): Filling existing stores, developing new ones (CORP) | Victoria* (VCP): Entry into the European flooring market (CORP) | eg solutions* (EGS): Exceptional H2 performance (CORP)