Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on ABB LTD-REG. We currently have 10 research reports from 1 professional analysts.
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Solid operating performance but declining orders
27 Oct 16
In Q3 16, revenues declined 3.1% to US$8.26bn (our estimate: US$8bn). Order intake dropped 14.1% to US$7.53bn and the order backlog declined 3.2% to US$24.55bn. The gross margin increased from 29.6% to 29.8% and the EBIT margin from 10.4% to 10.6%. Total EBIT remained nearly stable at around US$878m (our estimate: US$680m). Net profit declined 1.6% to US$568m. Adjusted EBITA declined 3.2% to US$1.046bn which was marginally above the consensus estimates of around US$1.4bn. The operating performance of the company was in line with market expectations but exceeded our estimates. The performance was mainly driven by the Power Grids division. Real EBIT increased 39.6% to US$222m and the EBIT margin improved from 5.7% to 8.4%. The EBIT margin of the Electrifications division increased from 16.6% to 16.9%, Discrete Automation & Motion from 11.9% to 12.5% and Process Automation from 9.6% to 11.2%.
Return on equity reduced by law
13 Oct 16
In Germany, the regulatory environment for the grid network has changed. The German Network Agency (Bundesnetzagentur) has changed the imputed return on equity which will apply for the next five years. The current regulatory periods for gas and electricity will expire in 2017 (gas) and 2018 (electricity). The new regulations for gas will apply as of January 2018 and for electricity 2019. The new return on equity for new assets will be reduced from 9.05% to 6.91% and for so-called old assets (activation prior January 2006) will decline from 7.14% to 5.12%. In each case without inflation and before corporate tax and after trade tax. According to estimates the lowered return on equity (equity ratio 40% max.) will reduce the yield by around €650m per year.
Business as usual!
05 Oct 16
The capital markets day ended as expected. The Power Grids division will not be separated from the company. The shareholder Cevian with a stake of 6.2% in the company had asked for a spin-off, IPO or joint venture. ABB’s response was quite obvious. Management will streamline the group and has initiated a share buy-back programme. Management has also started partnerships with Flour (transformation station) and the Norwegian service and maintenance company Aibel for offshore wind energy. In addition, a new EBITA margin corridor for the Power Grids division was announced. In 2018, the EBITA margin should range between 10% and 14% compared to 8-12% previously. In addition, management added some buzzwords such as relentless execution, streamlining the portfolio and digitalisation.
The communication engine has started!
22 Sep 16
Just after the supervisory board meeting another argument has arisen about not selling the Power Grids division. The Chinese company State Grid Corporation is interested in ABB’s leading-edge technology HVDC (high voltage direct current). State Grid Corporation is ABB’s largest customer but might also become its the largest competitor. The company controls more than 80% of the Chinese grid. According to recent rumours, State Grid is willing to pay up to US$20bn, which is in line with our net asset valuation.
Power Grids to remain part of the group!
21 Sep 16
ABB has sold its high-voltage cable business to the Danish company NKT Cables. The total enterprise value reached €836m, or US$934m. The high-voltage business was part of the Power Grids division and generated total revenues of around US$524m with around 900 employees. The business unit has manufacturing and R&D facilities for high-voltage submarine and underground cables in Karlskrona, Sweden. The deal will be closed in the first quarter of 2017.
Living in a different world!
21 Jul 16
The company reported disappointing second quarter results. Order intake declined 7.6% to US$8.3bn and revenues dropped 5.3% to US$8.7bn. Management experienced solid progress in profitability. Adjusted EBITA increased 4.5% to US$1.1bn and the EBITA margin increased from 11.5% to 12.7%. Real EBIT, however, plummeted 32.7% to US$647m and the EBIT margin declined from 10.5% to 7.5%. The ongoing cost-savings programme resulted in restructuring charges of US$367m. To make the unreal world perfect, management also reported operational EPS numbers which increased 16% from US$0.30 to US$0.35. Real EPS numbers dropped 28% from US$0.26 to US$0.19. Net income collapsed by 30.8% to US$407m.
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.
16 Jan 17
We take a look at the rankings of the various countries in Africa that have a significant exposure to mining. We take the Transparency International corruption rankings as our starting point and modify these for exceptional geology and for current UK government travel warnings. Ghana, Botswana and Namibia come out as our top three, with Eritrea, Kenya and Zimbabwe at the bottom of our rankings.
Small Cap Breakfast
17 Jan 17
Global Energy Development (GED.L) — To be renamed Nautilus Marine Services. Schedule 1 from developer and seller of hydrocarbons and related products. Reverse takeover. Raising $10.5m via a convertible. Expected 9 Feb. Eco (Atlantic) Oil & Gas—TSX-V listed oil and gas exploration has announced its intention to float on AIM. Assets in Guyana and Namibia. Proposed £2m-£3m fundraise. Diversified Gas & Oil—According to LSE website first day of trading on AIM now expected for 30 January.
N+1 Singer - St Ives - Downgrade
19 Jan 17
Marketing activation has been impacted by further decline in grocery retail impacting profit by c£5m. Strategic The Company is also taking this opportunity to revise its guidance for Strategic Marketing as its recovery pace is not running at the planned target rate. PBT falls from N1Se £31.9m to £25m. The Company expects dividend to be held based upon lowered guidance and the implied cash flow performance. There do not appear to be any covenant issues. Forecasts and TP under review and downgrade to Hold. We expect the shares to test the 100p level.
N+1 Singer - Northern lights - Shining prospects for 2017
16 Jan 17
As the birthplace of Stephenson, Armstrong and Swan, the North East of England has a proud history of industrial and technological innovation. Despite local economic challenges, the region’s industrial heritage lives on through continuing success in high end engineering and technology. The recent takeovers of private equity backed SMD (subsea robotics) and Nomad Digital (wi-fi on the railways) are testament to this. The North East has also emerged as a leader in genetics and genomics with an enviable life sciences and healthcare infrastructure. Against this backdrop, we expect the region to continue to throw up attractive IPO candidates to build on the six new listings in the past three years. We expect 2017 to be far kinder to the existing portfolio of North East plcs than 2016 (a year to forget) with recent management changes one important theme for the new year. Our top picks are Hargreaves Services, Quantum Pharma and Zytronic (all N+1 Singer Corporate clients) and we are Buyers of Northgate and Grainger.
N+1 Singer - Morning Song 19-01-2017
19 Jan 17
Actual Experience (ACT LN) 2017 – a milestone year for revenue | Bagir Group (BAGR LN) Independent NED appointment to strengthen Board composition | Bioquell (BQE LN) Reassuring pre-close statement | Carador Income Fund (CIFU LN) Q4 dividend increased to 2.75c, 0.5c higher than forecast | FreeAgent (FREE LN) Contract with Royal Bank of Scotland | Halfords Group (HFD LN) Excellent Q3 update, special divi and confidence in FX mitigations | N Brown Group (BWNG LN) Robust peak trading with reversal of drag from older titles | NCC Group (NCC LN) Interims confirm underlying business sound | St Ives (SIV LN) Downgrade | Summit Therapeutics (SUMM LN) Dr David Roblin appointed Chief Operating Officer and R&D President | Wilmington Group (WIL LN) Acquisition – Further scaling of Healthcare