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  • 18 Jul 19

Q2 19 was another superb quarter

Volvo’s revenue and earnings are generated with trucks (63% and 64% in H1 19, respectively) and construction equipment (22% and 28%). These highly cyclical businesses have continued doing very well in Q2, but trucks have started to see falling order inflow as have buses.

Companies: Volvo
  • 24 Apr 19

A formidable Q1 19

Much stronger than expected volume growth in the Americas combined with Swedish kronor weakness have translated into much stronger than anticipated revenue and profit growth.

Companies: Volvo
  • 30 Jan 19

Earnings and dividend higher than we had anticipated

Although Volvo suffered a charge of SEK7bn from the early degradation of an emission control component, it has delivered what we had anticipated. The reasons for the excellent profit number were SEK weakness plus much higher capacity utilisation. However, a further margin increase is unlikely in 2019 as order inflow growth has clearly moderated as of late.

Companies: Volvo
  • 04 Jan 19

SEK7bn provision for emission problem

Volvo has long tried to suggest that it is producing ‘green‘ trucks but management has discovered that one emission control component is degrading faster than expected. This translates into higher emissions and it forces Volvo to make the above provision which represents more than 25% of our projected 2018 Truck division’s EBIT. The company’s press release suggests that this provision only covers initial costs such as the testing of vehicles, statistical analysis and the dialogue with the relevant authorities. Subsequent recall costs associated with the implementation of corrective measures are expected to burden divisional earnings at a later stage.

Companies: Volvo
  • 19 Dec 18

SEK1.5bn profit from disposal of majority stake in WirelessCar

Volvo is selling a 75.1% stake in its fully-owned subsidiary WirelessCar to VW. The disposal price is SEK1.1bn, which translates into the above profit, i.e. the company currently shows negative equity. The transaction is expected to be finalised in H1 19. The subsidiary provides connected vehicle services and solutions to global producers of passenger cars as well as commercial vehicles. By keeping a minority stake, Volvo will continue to have access to the know-how and it will continue to focus on connected solutions for its trucks. WirelessCar had 3m connected vehicles around the globe in 2018 and turnover is projected to reach SEK0.5bn this year.

Companies: Volvo
  • 19 Oct 18

Volume, revenue and profit growth accelerated in Q3

Volvo’s Q3 revenue increased by 20% to SEK92bn which brought the ytd number to SEK285bn (+17%). The respective EBIT growth rates were +38% (to SEK10.2bn) and +31% (to SEK30bn). We had expected a 9M revenue number of SEK280bn and EBIT of SEK28.6bn.

Companies: Volvo
  • 16 Oct 18

Volvo potentially incurs its own Dieselgate

Volvo says that it has detected the premature degradation of one emissions control component. This leads to NOx emissions that exceed legal limits over time. The trucks involved were delivered overwhelmingly to clients in Europe and North America. According to the company’s release, it is impossible to assess the possible financial impact at this time, but the costs could be material.

Companies: Volvo
  • 19 Jul 18

Q2 has been formidable

Volvo’s Q2 revenue surpassed the SEK100bn level for the first time ever and EBIT of clearly more than SEK11bn was above the SEK10bn level for the first time as well. Strong demand combined with cost reductions in the past have translated into these superb numbers.

Companies: Volvo
  • 24 Apr 18

Q1 18 has been superb

Q1 order inflow has been very convincing indeed which provides comfort for the next quarters. This, plus better than expected numbers for the first quarter, allows us to raise our projections.

Companies: Volvo
  • 26 Feb 18

Geely’s acquisition of Daimler stake changes Volvo’s Supervisory Board

Volvo is clearly unsatisfied with Geely’s latest announcement. It had acquired a stake in Volvo just a few weeks ago and has now decided to buy a stake in Daimler, Volvo’s fierciest competitor for trucks around the world. It remains to be seen whether the nomination committee will allow a new Geely representative to join its Supervisory Board.

Companies: Volvo
  • 31 Jan 18

Q4 17 dollar weakness took its toll, but not on profits

Volvo released the expected superb 2017 numbers and management’s optimistic view for 2018 is also reflected in the dividend which is raised by SEK1 to SEK4.25 whereas we had expected SEK3.75. This higher dividend proposal was also supported by much improved cash generation.

Companies: Volvo
  • 29 Dec 17

Chinese Geely acquires the shares that were held by Cevian

Geely, which does not have any expertise in manufacturing trucks, has acquired a stake of a good 8% from Cevian. Speculations suggest that this might eventually lead to the re-merger of Volvo Trucks and Volvo Cars as Geely had acquired the latter operation from Ford earlier this decade.

Companies: Volvo
  • 20 Oct 17

9M 17 numbers ahead of our expectations

Volvo has delivered superb revenue and profit numbers. Consolidated revenue increased by a good 12% to SEK77bn in the last quarter which brought the 9M number to SEK243bn, an increase of almost 11%. The respective EBIT numbers were +60% to SEK7.42bn and +67% to SEK23.0bn. We had expected 9M numbers of SEK240bn (sales) and SEK20.6bn (EBIT).

Companies: Volvo
  • 01 Sep 17

New financial targets

Management has changed the financial targets for the Volvo Group from benchmark targets for the divisions to absolute targets for consolidated accounts. The previous goals were requiring the individual divisions (i.e. Trucks, Buses, Construction Equipment and Penta) to generate profit margins that were ranked amongst the top two of the respective industries. The new targets are a consolidated EBIT margin >10% over an entire business cycle. We find this target as being extremely ambitious and, in the past, Scania was the only truck producer that generated a margin of this magnitude. Caterpillar, the market leader for construction equipment, achieved double-digit EBIT margins in the years 2011 through to 2013, i.e. not during an entire business cycle. Our current projections see the EBITDA margin going up to slightly more than 13.5% in both 2017 and 2018 from 12.5% in 2016. However, Volvo’s H1 17 accounts show depreciation charges of 2.0% on tangible assets, 1.1% on intangible assets and another 2.1% on leased vehicles. As a result and based on these numbers and assuming the ratios will be similar for the full-year, the EBIT margin will be in the vicinity of 8.5% which is also the margin we have pencilled in into our P&L. Because of the sheer size of the Truck division, its profit development is of utmost importance for consolidated accounts. This division generated a peak margin of a good 8% in 2007 and 9% in 2011. The divisional margin, based on management’s definition, was just below 10% in both Q2 and H1 17. Our conclusion is that an EBIT margin of more than 10% is possible once demand for construction equipment and trucks, in particular for heavy trucks, is strong in all regions and at the same time. This, combined with further cost cuts, will allow Volvo to generate the proposed consolidated margin. However, the past has shown that both trucks and construction equipment are very cyclical operations indeed. Even if we assume that the group has restructured itself so that it can react in time when demand falls, we doubt that it can avoid a severe margin retreat, but it could possibly avoid a loss similar to the one it suffered in 2009. However, can it avoid a margin fall to just above 2% as in both 2013 and 2014?

Companies: Volvo
  • 26 Jul 17

Caterpillar raises full-year revenue and profit projections

As demand for construction machinery is finally rising just about everywhere with the exception of EMEA, management raises its full-year revenue projection from $38-41bn to $42-44bn. The new EPS guidance is $3.50 compared to $2.10. The sales and profit trends turned around in Q2 17. Revenue was up by almost 10% to $11.3bn and operating earnings increased by 59% to $1.25bn. The profit number clearly benefited from management’s strict cost control which is indicated by the fact that the workforce fell by 1,700 to 111,200 during the last twelve months. As Q1 17 was still quite poor, H1 revenue was up by only 6.8% to $21.2bn and EBIT by 30% to $1.67bn.

Companies: Volvo

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Research Tree provides access to ongoing research coverage, media content and regulatory news on Volvo. We currently have 41 research reports from 1 professional analysts.

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  • 21 Aug 19

LIBERUM: Costain* - Interims slightly ahead and further evidence of margin progression

H1 results were slightly ahead of expectations with divisional operating margins increasing from 3.5% in H1 18 to 4.0% in H1 19. We leave our FY19 earnings estimates unchanged given that management has confirmed it is trading in line with revised expectations.

Companies: Costain Group
  • 15 Aug 19

On a clear flightpath

Avation is a lessor of commercial passenger aircraft to a number of airlines, including VietJet, airBaltic, easyjet, Air France and Virgin Australia. The business was founded in 2006 by Jeff Chatfield, its current Executive Chairman, and is quoted on the full list. From a standing start, Avation has grown its fleet to 48 commercial passenger aircraft and has a proven capacity to buy and sell aircraft assets profitably. Its fleet is well diversified both by aircraft type and customer base. Our forecasts presently only reflect the addition of ATR 72-600s on order, leaving scope for our estimates to be raised as further aircraft are added to the fleet. Ahead of full year results next month, we see scope for another year of strong progress in FY 2020E for this US$ business and see fair value at 346p, some 20% above the current share price.

Companies: Avation
  • 15 Aug 19

Tencent drops after weak guidance, SoftBank makes energy investment, Security software leaks 1m fingerprints

Tencent shares slumped as much as 3.88% on Thursday after the Chinese technology giant missed analyst expectations, despite beating forecast on earnings. Revenue rose 21% year-on-year to 88.82 billion yuan. Profit attributable to shareholders beat analyst forecasts, rising 35% year-on-year to 24.14 billion yuan. The company's gaming division returned to growth, posting revenue of 27.3 billion yuan, up 8% year-on-year, with mobile games performing particularly well.

Companies: KAPE AVST BIDS CDM CNS DFX ECSC FLX FDEV GFIN IGP KWS NCC OSI SOPH SUMO TM17

  • 19 Aug 19

LIBERUM: Clarkson* - Awash with opportunities

The deployment of new digital platforms creates an additional layer of barriers to entry, with the long-term potential to put Clarkson's technology at the heart of all shipping transactions. Nearer term, the new IMO sulphur rules are likely to squeeze supply in markets where the demand/supply balance is already becoming more favourable.

Companies: Clarkson
  • 23 Jul 19

Quarterly Research Outlook - Summer 2019

In January, we provided a list of 11 stocks for 2019 that we believed would perform strongly with attractive catalysts that could lead to material outperformance. In this Quarterly Research Outlook, we revisit these views, analysing what has happened and how the remaining six months of the year could play out.

Companies: AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CALL CSRT TIDE CYAN DTG DEMG ELM EMR FPO FST GTLY GENL GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR HYR IBPO IOG INDI JHD JOG KAPE KEYS KCT KGH LAM LIT LOK MACF MANO PCA PANR PXC PHC PMO RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG SOM TWD TRAK TSG TRI VNET VTC ZOO ZTF

  • 22 Aug 19

H1 Results: Another Strong Performance

Net Income after tax of US$5.1 million was 39% higher than our forecast of US$3.7 million, primarily due to a lower than expected depreciation charge for the half year and lower financing charges. EBITDA for the half year of US$12.6 million was 5% below our forecast of US$13.2 million. Capital’s EBITDA margin of 23% is in line with both Tamesis estimates and H1/2018 despite the additional overheads in establishing the West African business. Cash from operations of US$10.5 million was 22% lower than our expected US$13.3 million – attributable to a larger than expected change in working capital.

Companies: Capital Drilling
  • 30 Jul 19

Positive AGM statement and $28.5m acquisition

Volex has issued a positive AGM statement and announced the $28.5m acquisition of Servatron, a complementary business based in Washington, USA. Our forecasts for FY2020E and FY2021E rise materially on the acquisition and also as a result of an operating margin performance that is noted as being ahead of current expectations. The AGM confirms a return to the dividend list that will occur at the interim and the Board notes it remains confident over the group’s outlook.

Companies: Volex
  • 13 Aug 19

China’s CB nears launch of digital currency, Uber falls to all-time low, Huawei debuts own operating system

An official at China's central bank has said the institution is nearing the launch of its digital currency. Speaking at an event in China over the weekend, Mu Changchun, deputy director of the payments unit at the People's Bank of China, said its researchers have been hard at work since last year to complete the systems needed to support the digital yuan offering and that it is "Close to being out." The news was reported by Bloomberg on Monday.

Companies: AMO BGO BOKU IQE TECH

  • 21 Aug 19

Profits on course to meet market expectations

As flagged in the Group’s July trading update, NFI has grown by 6% year on year (yoy) in constant currency against a mixed trading backdrop. Adjusted PBT was lower by 21% as a result of lower temp books in Germany and Japan and the ongoing uncertainty surrounding Brexit. The Group also incurred higher costs in H1 following investments made in H2 2018. Once again, Empresaria demonstratesthe benefits that diversification brings to the mitigation of cyclical and specific operational risks within its businesses and because of this and its management equity philosophy the Group differentiates itself from other human capital resource companies. With Rhona Driggs now in place as the new CEO, we look forward to the Group delivering a sequentially stronger H2 in line with our forecasts.

Companies: Empresaria Group
  • 21 Aug 19

Interim results

Interim results are in line with the expectations outlined within the July trading update; NFI increased 7% to £36.3m (H118: £34.0m) and PBT fell to £3.7m (H118: £4.7m). Importantly, Management note that it remains on track to deliver full year profit expectations. At a PER of 5.3x and offering a 3.3% yield, the shares remain undervalued in our view.

Companies: Empresaria Group
  • 02 Jul 19

Where’s the Value?

Warren Buffett once said that as an investor, it is wise to be ‘fearful when others are greedy and greedy when others are fearful’. Fear is not in short supply right now.

Companies: OPM ALU ANCR BLV CONN CRC FDL GATC HAT LEK MMH MCB MWE NXR NTBR NOG PAF PEG RFX SRC TEF TEG TPT VTU WYN XLM

  • 15 Aug 19

Trading update should be in line; recent weakness presents Buying opportunity

Kin & Carta will release a pre-close trading statement next week, a significant update in our view given the absence of material newsflow since the March 19 interims. We expect this to be in line, underpinning our forecasted 3.5% y/y revenue growth for FY19e (which assumes 28% LFL y/y growth in Innovation, -5% in Strategy and -11% in Comms), at a group 11.3% op. margin. Following recent share price weakness, we see the current 8.5x P/E multiple for FY20e (10.3% FCF yield) as being unjustified. Buy.

Companies: Kin and Carta
  • 26 Apr 19

H1 rock solid – and strategic foundations laid

AB Dynamics (“ABD”) has delivered a strong H1 FY19 performance for the six months to February, as heralded in the early-April update. Revenue grew a stunning 69%, and reported PBT almost doubled. The group appears to be benefiting from recent investment, and is well placed to continue to prosper in a highly attractive (and growing) end market. The announcement also includes five pillars of the revised strategy – New Product Development, Capability & Capacity, International Footprint, Service and Support, and Acquisitive Growth. We increase our adjusted PBT estimates by 9% and 8% respectively for FY 2019E and FY 2020E and look forward to the group delivering against its clearly-significant potential.

Companies: AB Dynamics
  • 13 Jun 19

Significant momentum being generated

Volex had already signalled trading was ahead of expectations but with adjusted PBT increasing from US$9.6m to US$20.2m against initial expectations of US$18.3m, these results confirm the momentum generated by Volex. In addition, the cash balance of US$20.6m beat our estimate of US$15.7m and management now expects to reinstate the dividend in FY20. Trading on a FY20 PE rating of 9.6x, a FCF yield of 7.7% and offering a potential dividend yield of 2.3%, we reiterate our buy recommendation. We have also increased our price target from 130p to 140p to reflect increased contributions from the higher margin Cable Assembly division. Even then, at 140p the FY20 PE rating is still only 13x. Thus, with significant growth, net cash, a single digit rating and the expectation of a dividend, Volex offers substantial upside and remains undervalued.

Companies: Volex
  • 05 Jul 19

Small Cap Feast

ReAssure Group plc - The Group is a leading closed book life insurance consolidator in the United Kingdom with 4.3m policies, £68.7 billion of assets under administration on a Post-L&G Illustrative Basis. It is considering a premium listing segment of the main market. Voyager AIR The Company will focus on the acquisition, leasing and management of primarily widebody aircraft, with asset management services to be provided by Amedeo Limited he IPO will comprise a Placing and Offer for Subscription of Shares to raise up to approximately US$200m· IMC Exploration Group (NEX: IMCP), focused on acquiring and exploring prospecting licence areas which have high potential for natural resource, is looking to admit its shares to the standard list and will withdraw for the NEX Exchange. TBC Uniphar, a diversified healthcare services business with a workforce of over 2,000, is looking to join AIM. Raise TBC, expected mid-July 2019

Companies: SRT CHH VELA CREO ASH MIRA ECO AQX ARCM DRV