Muted 1Q16 EBIT results are EUR 1.76bn/9.4% for the Automotive segment and EUR 2.46bn/11.8% for the group. In 2016E-18E, we expect EPS to grow at a CAGR of 3.1% and reach EUR 10.63 in FY18E. Our YE16 target price of EUR 93 implies a 26% upside potential for BMW shares.
Category Archives: Automotive
Daimler 1Q16E preview
Investment opinion – BUY: Based on historic P/E valuation, we calculate a target price of EUR 81 for YE2016E, implying a 23% upside from the current share price. The new TP is 3.2% above our previous TP (of EUR 79) of February 2nd. The chart- technical outlook for Daimler shares is negative. (See pp.14-15.)
Daimler 4Q FY15E Preview
Investment opinion – BUY: Based on historic P/E valuation, we calculate a target
price of EUR 79 for YE2016E, implying a 23% upside from the current share price.
The new TP is 25% below our previous TP (of EUR 105) of October 23rd, reflecting
the collapse in the global equity markets seen since the beginning of the year. The
chart-technical outlook for Daimler share is negative.
Global Automotive Demand Atlas
Since January 1st, shares in the global automotive OEM stocks and the entire supply industry have been one of the hardest hit sectors. We do believe that the recent sell off is totally overdone, irrational, and based on the very low current prices and valuations we see tremendous opportunities in select stocks.
Europe Auto 1Q16 calendar
European Automotive and Truck Sector Calendar of Events: January – March 2016
Global Automotive Demand Atlas November 2015 edition
In October, global light vehicle sales increased 5.1% yoy to 7.62m, after 2.9% in September, resulting in a 1.5% increase to 73.26m YTD. LMC Automotive (LMCA) calculate that underlying demand continued to strengthen in October, with a SAAR (seasonally adjusted annualised rate) of 92.4m units/year, up 4.0% from 88.8m in September, resulting in a YTD SAAR of 88.2m, up less than 1% from FY14’s 87.4m. The recovery of the October SAAR to levels last seen in December (92.1m) and January (89.4m), is due to a strong recovery in China, supported by continuing strong performances in the US and Western Europe.
BMW (EUR 92) BUY – 3Q15A results & FY15E-17E preview
BUY: Based on historic P/E valuation, we calculate a target price of EUR 112 for YE16E. This implies a 21% upside potential from the current share price. The chart technical outlook is positive and the next levels of minor resistance around EUR 93 and EUR 96 should not prevent BMW shares to test their 200-day moving average around EUR 98. (See pp.16-17.)
BMW 3Q15E preview
BUY: Based on historic P/E valuation, we calculate a target price of EUR 110 for YE16E. This implies a 19% upside potential from the current share price. The chart technical outlook is positive and the next levels of minor resistance around EUR 93 and EUR 96 should not prevent BMW shares to test their 200-day moving average around EUR 98. (See pp.15-16.)
Daimler (EUR 78.73) BUY 3Q15A Results & FY15E-17E Preview
BUY: Based on historic P/E valuation, we calculate a target price of EUR 105 for YE16. This implies a 33% upside from the current share price of EUR 78.73. Daimler shares are in a positive short- and medium-term upside momentum. (See pp.15-16.)
Daimler (EUR 72.33) BUY 3Q15E Preview
BUY: Based on historic P/E valuation, we calculate a target price of EUR 103 for YE16. This implies a 43% upside from the current share price of EUR 72.33. (See p.14.)
Global Automotive Demand Atlas September-October 2015 edition
In August, global light vehicle sales dipped 0.1% yoy to 6.99m, after a 0.3% decline in July, resulting in a 0.9% increase to 57.09m YTD. For FY15E, we expect a global LV market of 88.1m, implying an increase by 0.7% or 0.6m. This is a downgrade from the previous forecast of 89.0m and an implied increase by 1.7% or 1.5m. The FY15E growth rate is thus expected to be a fraction of FY14’s 3.7% and FY13’s 4.0%.
Daimler 2Q15E Preview
Daimler shares’ long-term positive trend is intact. Daimler shares are in a short- term correction. The short-term technicals are still negative with RSI and MACD both negative. Daimler shares have downside risk towards the 50-day moving average of around EUR 75 a share. We are advising to accumulate Daimler shares at current levels. Our medium- term price target for Daimler shares is EUR 110.
Daimler (EUR 84.99) BUY 2Q15E Preview
BUY: Based on historic P/E valuation, we calculate a target price of EUR 103 for YE15. This implies a 21.3% upside from the current share price of EUR 85. The chart technical long-term trend remains positive, though Daimler shares are in a short- term correction. (See pp.14-15.)
June 2015 Global Automotive Demand Atlas
In May, global light vehicle sales declined 1.4% yoy to 7.33m, after a 1.6% increase in April, resulting in a 1.1% increase to 36.79m YTD. LMC Automotive (LMCA) calculate that in May the SAAR (seasonally adjusted annualized rate) was 87.0m, units/year, down from 88.4m in April and well below January’s 89.4m, and 88.0m YTD.
The global LV sales that have been stable so far during 2015 are considerably weaker than a surprisingly strong December SAAR of 92.1m/year, confirming the suspicion that the latter was due to year-end marketing pushes in key markets.
For FY15E, we expect a global LV market of 89.0m, implying an increase by 1.7% or 1.5m. This is a downgrade from the previous forecast of 89.2m and an implied increase by 1.9% or 1.7m. The growth rate is thus expected to more than halve in 2015E, from 3.7% in FY14 and 4.0% in FY13.
FCA and GM – A Marriage Made in Heaven or Hell?
Another year, another merger rumour surrounding FCA! Only this time it is more than a rumour. We believe that FCA’s CEO Marchionne looks for a tie-up with the epicentre in NAFTA. Mr. Marchionne has repeatedly said that there was a need for more consolidation in the auto industry to spread the costs of developing new models, efficient engines and clean-emissions technologies. We do not believe that mega mergers are the answer.
Continue reading
CGI USA Strategy Update
May’s strong auto sales have raised expectations for this Thursday’s May retail
sales report. Regardless as to what number prints for retail sales, we believe that the near
daily pattern of divergent (and often conflicting) economic data will remain the
status quo and contribute to a rise in daily volatility.
Continue reading
Global Automotive Demand Atlas, May 2015 edition
For FY15E, we expect a global LV market of 89.2m, implying an increase by 1.9% or 1.7m. The growth rate is thus expected to almost halve in 2015E, from 3.7% in FY14 and 4.0% in FY13.
BMW (EUR 102) – BUY
Solid 1Q15 auto results reflect ‘normalisation’ in China to single-digit growth rates and profit margins. In 2015E-17E, we expect EPS to grow at a CAGR of 8.1% and reach EUR 11.15 in FY17E. Our new YE15 target price of EUR 125 implies a 22% upside potential for BMW shares.
Daimler (EUR 88.00) – BUY
A strong 1Q15 bodes well for FY15E as Mercedes-Benz is set to grow EBIT and margin to EUR 7.99bn/9.6%. In 2015E-17E, we expect EPS to grow at a CAGR of 14.3% and reach EUR 9.70 in FY17E. Our YE15 new target price of EUR 103 implies a 17.5% upside potential for Daimler shares.
Morning Market Commentary & Weekly Charts
If the current slow GDP trend continues, and all signs we see point to this, then the level of earnings for the S&P 500 could be the lowest seen in two years. Q1. We are convinced by the initial data that this year’s Q2 will not be nearly as strong; we maintain our 2015 forecast for +2.2% GDP growth. It is time to make a few portfolio adjustments.
020415: Daimler FY14 Preview
02 04 2015 Daimler – 4Q-FY14E preview
Auto Analyst Sabine Blumel’s preview of Daimler’s 2014 results due Feb 5th.
011415 – CGI Global Automotive Demand Atlas
01 14 2015 CGI – GADA – January 2015 edition
Automotive Analyst Sabine Blumel reviews global automotive demand by country.
Global Automotive Demand Atlas
10 20 2014 CGI – GADA – October edition
Automotive Analyst Sabine Blumel analyzes current demand in the global automotive industry.
Daimler 3Q14 Results Commentary
10 28 2014 CGI – Daimler – 3Q14A results commen
Automotive Analyst Sabine Blumel’s comments on Daimler’s Q3 results.
080114 – CGI Global Automotive Demand Atlas August/September
09 01 2014 CGI – GADA – August-September edition
Automotive Analyst Sabine Blumel analyzes global automotive demand trends.
061114 – Global Automotive Demand – Emerging Markets
06 11 2014 CGI – GADA – Emerging Markets – June 2014
Auto Analyst Sabine Blumel reviews the outlook for automotive demand in the Emerging Markets.
053014 – CGI Global Automotive Demand Atlas, May
05 30 2014 CGI – GADA – May 2014 edition
Analyst Sabine Blumel reviews Global Automotive Demand by major market globally. SAAR revised down slightly due to the worsening outlook in a number of emerging markets,the FY14E forecast is a 3.5% increase to some 87.3m; this implies a deceleration from last year’s restated +3.9% growth to 84.36m.
052214 – CGI Seasonality Analysis
We review the seasonality factors impacting global debt and equity markets over the summer. Equities are expected to see a period of weakness, with good probability for an increase in volatility mid summer.
050714 – BMW 1Q14 Results Commentary – BUY
05 06 2014 CGI – BMW – 1Q14A results comment
1Q14A group results in line with 1Q14E. Strong result at Automotive segment, despite front-loaded costs. We keep FY14E estimates virtually unchanged and confirm those for 2015E-16E. Our 2016E EPS is EUR 10.34 and our YE14 target price of EUR 110.00 implies a 25% upside potential for BMW shares.
The short term technical outlook for BMW shares is neutral/negative. The risks of BMW shares not holding support at that level are high, and we expect for BMW shares to test the next support level at the 200-day moving average at EUR 82. The long term positive outlook for BMW shares remains positive.
0505 2014 -BMW (EUR 89.10) – BUY 2014E-16E outlook – EPS growth at CAGR of 8.5%
BMW (EUR 89.10) – BUY
2014E-16E outlook – EPS growth at CAGR of 8.5%
Our 2016E EPS is EUR 10.34; our YE14 target price of EUR 110.00 implies a 24% upside potential for BMW shares
05052015 – BMW 1Q 2014 Results Preview
05 05 2014 CGI – BMW – 1Q14E preview
Automotive Analyst Sabine Blumel presents 1Q 2014 Results preview.
Our 1Q14E EBIT estimates are EUR 1.67bn/9.7% for the Automotive segment and EUR 2.10bn/11.2% for the group.
Our 2016E EPS is EUR 10.34 and our YE14 target price of EUR 110.00 implies a 24% upside potential for BMW shares.
1Q14E group: we expect that a 6.9% yoy increase in revenue to EUR 18.76bn generated yoy increases of 3.0% in EBIT to EUR 2.10bn/11.2% and 5.0% in net profit to EUR 1.37bn. We thus expect that BMW management will confirm their bullish guidance for FY14 of a ‘significant increase in its group’s pre-tax profit’, driven by ‘a significant increase in sales’.
At the dominant Automotive segment, we expect that in 1Q14E a reported a 8.7% increase in retail sales to 487.0k units (that include 108.0k sales in China, 62.5k of which were sold by a JV) generated a 9.3% increase in PBT to EUR 1.66bn/9.6%. We expect that a reported 4.8% yoy increase in fully consolidated retail sales to 424.5k units (incl. 45.5k cars imported to China) generated increases of 8.0% in revenue to EUR 17.18bn and of 5.3% in EBIT to EUR 1.67bn/9.7%, from a strong EUR 1.58bn/9.9% in 1Q13. We see the expected EUR 1.27bn yoy EBIT increase driven by positives such as volume and a better mix; expected headwinds include launch costs, costs related to Strategy Number one and forex. (See pp.5-7)
0501 2014 – Daimler 1Q14 Results Commentary
05 01 2014 CGI – Daimler – 1Q14 results review
Automotive Analyst Sabine Blumel comments on Daimler 1q 2014 results: 1Q14A EBIT in line with 1Q14E: EUR 2.07bn for the group & EUR 1.18bn at M-B Cars. Some disappointment: at M-B Cars, a lower than expected 7.0% margin and at Trucks, lower than expected EBIT (EUR 0.35bn/4.9%) due to country-mix. We fine-tuned our FY14E EPS to a 19% increase to EUR 5.93. Our YE14 TP of EUR 82.00 implies a 24% upside potential for Daimler shares.
Daimler 2Q13 Earnings, Models & Valuation
Daimler: A sharp improvement in 2Q13 results points towards strong earnings recovery in 2H13E & 2014E-15E.
Daimler (EUR 54.21) – BUY Target price: EUR 72.94; potential +35%
Previous target price: EUR 51.97 (April 16th).
BMW 1Q13E preview & FY13E and Valuation
BMW (EUR 70.25) – BUY – Target price (YE 2013E): EUR 86.99; potential +24%
A valuation in line with the 10-year average historic valuation of 10.2x implies a share price of EUR 88.05 at year-end 2014E and time-discounted (yield of 10-year Bund), a target price of EUR 86.99 at year-end 2013E, which is 23.8% above the current share price (EUR 70.25) and in line with our previous target price of EUR 87.24 (March 18th). (See our latest company reports ‘BMW – 1Q13E preview’ of April 30th.)
Global Automotive Demand Atlas – April edition
In March, the global light vehicle markets declined 1.5% yoy to 7.96m units, after having declined 6.2% yoy in February, resulting in a 1.6% yoy increase in YTD, according to LMC Automotive. The SAAR (seasonally adjusted annualised rate) of sales was 81.26m units/year, 2.0% higher than February’s 79.68m and 5.4% down from a record 85.91m in January. YTD, the SAAR was 82.83m, 2.3% higher than FY12’s 81.00m. In FY13E, the global LVs markets are expected to grow 2.8% to 83.2m, which implies a considerable deceleration from last year’s 5.3% and is in line with our previous forecast. (See GADA March 2013 edition of April 1st, 2013.) From 2014 onwards, the markets are expected to accelerate again and to grow by almost 7% p.a. in 2014E and 2015E.
Daimler 1Q13 Valuation & Preview
Daimler (EUR 39.44) – BUY – Target price: EUR 51.97; potential +32%
At EUR 39.44, Daimler shares are currently valued at 7.2x prospective 2013E earnings and 6.7x prospective 2014E earnings; the latter is at a 36% discount to the 5-year average historic valuation of 10.5x and at a 25% discount to the 10-year low historic valuation of 8.9x. This is inconsistent with the implication that our estimates for 2014E EPS (EUR 5.91) are 44% above the 5-year average of EUR 4.11 and 63% above the 10-year average of EUR 3.62.
A valuation in line with the 10-year low historic valuation of 8.9x implies a share price of EUR 52.63 at year-end 2014E and time-discounted (yield of 10-year Bund) a target price of EUR 51.97 at year-end 2013E, which is 32% above the current share price and 15% below our previous target price of EUR 60.91 (February 11th). (See our latest company report ‘Daimler: 1Q13E preview’ of April 16th.)
Morning Market Commentary – US$ impact on stocks & Sector rotation, into cyclicals, materials, mining
The Euro has realized rather pronounced declines since the start of February, but recently momentum indicators have diverged from the short-term price action, indicating that selling pressures were abating. The intermediate trend is noted to have changed, but a continuation of this short-term rebound is reasonable as the currency corrects an oversold condition. A retest of the 50-day moving average around 1.32, and even up to 1.3450 is increasingly probable as the currency exits a period of seasonal weakness that concluded at the end of March.
Euro strength has generally coincided with US$ index weakness, often seen as a positive catalyst for equity and commodity prices.
The US$ index is showing signs of rolling over from its recent positive trend. The US$ index is pushing towards its 50-day average as seasonal weakness in the month of April pressures the currency lower.
BMW (EUR 70.00)-BUY
A valuation in line with the 10-year average historic valuation of 10.3x implies a share price of EUR 88.52 at year-end 2014E and time-discounted (yield of 10-year Bund), a target price of EUR 87.24 at year-end 2013E, which is 24.6% above the current share price (EUR 70.00) and 2.7% below our previous target price of EUR 89.69 (March 12th). (See our latest company reports ‘BMW – 4Q/FY12A prel. results comment’ of March 18th and ‘BMW – 4Q/FY12E preview’ of March 12th.)
BMW: 4Q/FY12 Preliminary Results Comment & Model
BMW shares – our view: The current BMW share price of EUR 70.00 values BMW at 8.7x 2013E prospective earnings and at 8.1x prospective 2014E earnings; the latter is a 21% discount to the 10-year average historic valuation of 10.3x. This is inconsistent with the implication that our 2014E EPS estimates (EUR 8.63) are 11% above FY12’s record EUR 7.77 and 100% higher than the 10-yr average (EUR 4.31). (See pp.11-12.) Continue reading
BMW: 4Q/FY12E Preview
BMW shares – our view: The current BMW share price of EUR 72.65 values BMW shares at 9.0x 2013E prospective earnings and at 8.4x prospective 2014E earnings; the latter is a 20% discount to the 10-year average historic valuation of 10.5x. This is inconsistent with the implication that our 2014E EPS estimates of EUR 8.63 are 16% above 2011’s record EUR 7.45, 74% higher than the 5-year average of EUR 4.97 and 123% higher than the 10-year average of EUR 3.87. (See pp. 21-22.)
Global Automotive Demand Atlas – February edition
In January, the global light vehicle markets grew 12.0% yoy, after having advanced 1.3% yoy in December and 5.2% to 80.89m in FY12, according to LMC Automotive. The SAAR (seasonally adjusted annualised rate) of sales hit a record level of 85.91m units/year in January, 4.4% higher than December’s 82.31m. In FY13E, the global LVs markets are expected to decelerate sharply and grow just 2.7% to 83.0m, in line with our previous forecast. (See GADA January 2013 edition of January 23rd, 2013.)
Morning Market Commentary – No sell signals yet NDX;AAPL;Currency Musings;Global Automakers
We continue to see one good investment solution to the problem of global currency wars: Investors should continue to buy Gold.
We have been recommending for 3 years to “sell/short” the French OEM’s and also Fiat, in Italy, which in retrospect clearly was an alpha generating call for investors over the entire time period.
Given recent macro-dynamic changes, in monetary policies, impacting currency markets around the world, namely the Yen weakening substantially versus most currencies, particularly the US$, the EURO, but also mostly against the Korean Won, we have become bullish in September 2012 on Japanese stocks, calling for a major rise in the Nikkei, and implicitly seeing a bullish case in favor of Japanese car companies.
Daimler Valuation (EUR 45.45) – BUY
At EUR 45.45, Daimler shares are currently valued at 9.6x prospective 2013E earnings and 7.7x prospective 2014E earnings; the latter is at a 27% discount to the 5-year average historic valuation of 10.5x and at a 14% discount to the 10-year low historic valuation of 8.9x. This is inconsistent with the implication that our estimates for 2014E EPS (EUR 5.91) are 44% above the 5-year average of EUR 4.11 and 63% above the 10-year average of EUR 3.62.
A valuation in line with the 5-year average historic valuation of 10.5x implies a share price of EUR 61.90 at year-end 2014E and time-discounted (yield of 10-year Bund) a target price of EUR 60.91 at year-end 2013E, which is 34% above the current share price. (See our latest company report ‘Daimler: 4Q/FY12A operational results in line. 2013 set to be yet another ‘year of transition’ of February 11th.)
Daimler 4Q-FY12A results, FY13E-FY14E fine-tuned
Daimler shares – our view: At EUR 45.45, Daimler shares are currently valued at 9.6x prospective 2013E earnings and 7.7x prospective 2014E earnings; the latter is at a 27% discount to the 5-year average historic valuation of 10.5x and at a 14% discount to the 10-year low historic valuation of 8.9x. This is inconsistent with the implication that our estimates for 2014E EPS (EUR 5.91) are 44% above the 5-year average of EUR 4.11 and 63% above the 10-year average of EUR 3.62. (See pp. 24-25.)
FORD: Slippery slope Europe
A more import factor, in our view, is the polarisation in demand into premium and discount brands and product that has been intact for the past 20 years and accentuated during the crisis. Driving forces have been the downsizing on the part of the premium brands and an improvement in quality of discount brands. As a result the mainstream brands such as GM’s Opel/Vauxhall, Ford and local champions such as Peugeot, Citroën and Fiat have lost ground.
See also our monthly publication ‘Global Automotive Demand Atlas’ p.8. We published the January edition on January 23rd. Continue reading
Global Automotive Demand Atlas January 2013 edition
In December, the global light vehicle markets grew 1.3% yoy, after having advanced 4.3% in November, resulting in a 5.2% increase to 80.89m in FY12, according to LMC Automotive. The SAAR (seasonally adjusted annualised rate) of sales declined somewhat to 82.31m units/year in December, from 83.03m units/year in November, though was better than in October and September. In 2013E, the global LVs markets are expected to decelerate sharply and grow just 2.3% to 82.73m, in line with our previous forecast. (See GADA December 2012 edition of December 19th, 2012.) Continue reading
FORD Commentary “BUY”
FORD (NYSE: F US$ 10.80) BUY – 6 Months Price Target US$14
Between 2008 and 2012, revenues fell from $143.6 billion in 2008 to an estimated $130 billion this year. The company took $14.8 billion in losses in 2008, but has been profitable ever since. Ford’s performance of its different operations is rapidly diverging. US quarterly profits and operating margins hit the highest level since 2000. Ford’s operating margins of 12.0% during the quarter were very strong. Strength in Ford’s core business was offset by weakness in Latin America and continuing problems in Europe.
Global Automotive Valuations – September 2012 Edition
– Europe, US, Japan, Korea & India OEMs Valuations
– Global Truck Manufactures Valuations
Global Automotive Demand Atlas – September 2012 edition
- US LV Sales
- Western Europe Car Market – Germany, France, Italy, Spain, UK
- Japan pc market
- China LV market
- Brazil pc market
- Russia LV market
- Demand trend for trucks – US, Europe, Japan
Morning Market Commentary & Weekly Charts – Russia’s “Nukes of Hazard”
Weekly Investment Conclusion:
Downside risk exceeds upside potential in equity markets during the next six weeks.The breakout by the S&P 500 Index last week implies that depth of the downside risk is less than previous. Selected seasonal trades continue on the upside (gold, energy, software) and downside (transportation). However, many of these seasonal trades reach the end of their period of seasonal strength this month. September is a month of transition.
Daimler in the fast lane: 3Q10 results & FY10E-12E
Mercedes-Benz Cars keeps driving earnings upgrade FY10E-12E. Earnings upgrade for FY10E. Our view: At EUR 48.40, Daimler shares are currently valued at 7.9x prospective 2012E earnings, which is at a 32% discount to the 5-year (2004-08) low historic valuation of 11.7x and a 21% discount to the 10-year (1999-2008) low historic valuation of 10.0x. This is inconsistent with the implication that our estimates for 2012E EPS (EUR 6.12), which we do not expect to be peak earnings, are 60% above 2007’s pre- crisis EUR 3.83 and the 10-year average of EUR 3.84 and 98% above the 5-year average of EUR 3.08. (See pp. 24-25 for details.)
Daimler earnings recovery is gaining even more traction
Our view: At EUR 44.60, Daimler shares are currently valued at 7.4x prospective 2012E earnings, which is at a 37% discount to the 5-year (2004-08) low historic valuation of 11.7x and a 26% discount to the 10-year (1999-2008) low historic valuation of 10.0x. This is inconsistent with the implication that our estimates for 2012E EPS (EUR 6.04), which we do not expect to be peak earnings, are 57% above 2007’s pre- crisis EUR 3.83 and the 10-year average of EUR 3.84 and 96% above the 5-year average of EUR 3.08. (See pp. 25-26 for details.) Our indepth report…
Paris Motor Show 2010 – Preview
We are previewing 34 cars and concepts, including concepts for electric scooters by Smart and Mini ␣ There is still a lot of fun and glamour in the industry, with a number of premium products and performance cars on show both as concept and production cars.
BMW zooming off in the fast lane!
Management under CEO Reithofer have taken a highly pro-active business approach and introduced a modular production & development strategy for future products, are accelerating the model momentum and efficiently hedging currency. This has put BMW in a position to better take advantage of external factors such as a strong global recovery in demand and pricing of premium cars, and increased volatility in the currency markets.
Daimler Valuation
A valuation in line with the 10-year low historic valuation of 10.0x implies a share price of EUR 56.71 at year-end 2012E and time-discounted (yield of 10-year Bund) a target price of EUR 53.72 at year-end 2010E, which is 23.3% above the current share price. See our latest company report on Daimler of July 26th.
BMW 1Q10E preview and tables
Our view: Following a sharp 32% increase from a 2010-low of EUR 28.75 (on February 15th) the BMW share price hit a two-year high of almost EUR 38 on April 26th. The current BMW share price of EUR 36.69 values BMW shares at 11.8x 2011E earnings, which is at a 21% premium to the 5-year average pre-crisis historic valuation of 9.8x. This is inconsistent with the implication that our 2011E EPS (EUR 3.11) are 35% below 2007’s EUR 4.78 and 17% below the pre-crisis 5-year average of EUR 3.74. (See pp.10-11 for details.)
BMW Valuation
Even a valuation in line with the 5-year average pre-crisis historic valuation of 9.8x implies a share price of EUR 30.36 at year-end 2011E and time-discounted (yield of 10-year Bund), a target price of EUR 29.46 at year-end 2010E, which is 19.7% below the current share price and 10% above the previous target price of EUR 26.77. See our latest company report on BMW of April 29th.
Daimler prel 1Q10 results & upgrade estimates and tables
Daimler’s preliminary 1Q10 results: stellar performance at M-B Cars and Daimler Trucks busting FY10 guidance. Management doubled their FY10 outlook for M-B Cars to EUR 2.5-3.0bn and trebled that for Trucks to EUR 0.5-0.7bn. We raised our EPS estimates by 64% to EUR 2.74 in FY10E and by 20% to EUR 3.75 in FY11E. (Final 1Q10 results are due Tuesday, April 27th.)
VW Capital Increase
VW announced that it plans to offer up to 65m new preferred non-voting shares, with the sale price, subscription ratio and the offer volume to be decided by March 26. VW intends to raise ‘around EUR 4bn’ in order to fund the Porsche takeover and preserve its credit rating of A- (S&P) and A3 (Moody’s). The issuance of 65m preferred shares would raise around EUR 4.5bn (based on the share price of EUR 68.65 at close March 23rd) and increase the existing number of shares (295m ordinary and 105.24m preferred) by 16%.
BMW 4Q/FY09E preview and tables
FY09E earnings at EUR 151m/EUR 0.24 per share. We expect that in FY09E, an already announced 4.7% decline in group revenue to EUR 50.68bn resulted in declines of 26% in pre-tax profit to EUR 259m/0.5% and of 53% in net profit to EUR 151m/0.3% or EUR 0.24 per share. We estimate that this was the result of an EBIT of EUR 393m/0.8% and a net financial charge of EUR -134m. (See pp.2, 4-6 for details.)
VW 4Q09/FY09 results comment and 2010E-11E estimates
Our view: The current VW preferred share price of EUR 59.93 is in line with the YE09 price and values VW preferred shares at 8x prospective 2011E earnings which is at a 15% discount to the 5-year average historic valuation of 9.4x. This is inconsistent with the implication that our 2011 EPS (EUR 7.52) estimates are 15% above the 5-year average of EUR 6.55. (See pp.6-7 for details.)
Daimler Earning Update 2010E-11E
Daimler’s 4Q/FY09 results: M-B Cars and Vans surprised on the upside. We confirm our view of an EPS recovery to EUR 1.67 in FY10E and EUR 3.38 in FY11E.
Daimler 4Q/FY09 provisional results comment & tables
Daimler 4Q/FY09 provisional results comment: Group EBIT slightly down qoq despite greater than expected margin improvement at M-B Cars and M-B Vans. Decision to pay no dividend for 2009 does not reflect on FY10 outlook and is actually shareholder friendly, according to management. M-B Cars generated a 4Q09 EBIT of EUR 608m and a 5.3% margin. Management guidance for FY10 is a group EBIT in excess of EUR 2.3bn driven by M-B cars and Trucks. Conservative assumptions regarding market developments, in particular at trucks, point towards the guidance being a floor, in our view.
Daimler 4Q/FY09E preview
We expect that Daimler which turned profitable again in 3Q09, will report further improvements in group profits at all levels in 4Q09E; a 18.5% qoq improvement in EBIT to EUR 557m/2.5% (from EUR 470m/2.4% in 3Q09), a 37% qoq increase in pre-tax profit to EUR 393m/1.8% and a net income of EUR 350m.
BMW 4Q/FY09 preliminary results
The current BMW share price of EUR 32.19 is 11% down from its 2009 peak of EUR 36.14 (October 23rd) and up 12% from a 2010-low of EUR 28.75 (on February 15th). This values BMW shares at 11.4x 2011E earnings, which is at a 17% premium to the 5-year average pre-crisis historic valuation of 9.8x. This is inconsistent with the implication that our 2011E EPS (EUR 2.85) are 40.5% below 2007’s EUR 4.78 and 23.9% below the pre-crisis 5-year average of EUR 3.74.
Renault 2H/FY09 results tables and guidance
Renault – 2H/FY09 results highlight competitive weakness and excellence in cost-cutting: Group net loss narrowed in 2H09, but worse than consensus. Auto division close to break-even in 2H09, as stringent cost cuts and efficiency gains accompany a recovery in sales. Mix and price remain a worry. Efficiency gains in WC management were crucial for increasing FCF in 2H09. No earnings guidance for 2010, but commitment to positive FCF.
Peugeot 2H09/FY09E preview & results table and guidance
PSA – 2H09/FY09 results uninspiring: Auto division reported a reduced EUR 353m operating loss in 2H09, worse than our expectation. Positives factors, higher volumes (production and sales) and cost cuts were outdone by negative pricing, mix and currency. Group net loss/share is EUR 5.12 for FY09, vs. our estimate of EUR 4.71. Management declined to give an earning guidance for FY10, and committed only to a positive group recurring operating result for 1H10.
Toyota Motor Commentary
We do believe that the problems for Toyota will continue to get worse, and in fact are deeper than what has surfaced to date. We are reiterating our Sell Recommendation on Toyota Motors Corp.
BMW FY09 & Management Update
Management expect a positive pre-tax result for 2009. Decline in group revenue led by the Auto division. We confirm our FY10E- FY11E estimates: recovery in sales and earnings.
Daimler strong car sales in 4Q09 are just the beginning of an earnings recovery
The Daimler share price doubled from a LT low a year ago, to EUR 36.24 currently, valuing Daimler shares at 11.1x 2011E earnings, which is at a 31% discount to the 5-year average historic valuation. Our estimates imply that 2011E EPS (EUR 3.28) are 14.7% below 2007’s pre-crisis 2007’s EUR 3.83 and 6.2% above the 5-year average of EUR 3.08
BMW set for sales recovery, after 10.4% decline in FY09
We confirm our FY09E estimates of a group EBIT of EUR 393m/0.8% and earnings of EUR 0.24 per share. The Auto division is set to exit a dismal 2009 with a strong EUR 140m/1.1% in 4Q09E, leading to a negative EBIT of EUR -218m in FY09E. Higher sales, a further ramp-up in production and improving model momentum should drive the EUR 216m qoq earnings improvement in 4Q09E.
BMW praying for a weaker euro
BMW group remains at the mercy of currency, the US dollar in particular.
Porsche-VW Merger Progresses
VW’s extraordinary general meeting (Dec. 3rd) prepared the ground for two important steps in the two-year multi-stage merger with Porsche SE: VW’s acquisition of 49.9% of Porsche AG for EUR 3.9bn cash (that took place on Dec. 7th) and a EUR 4bn capital increase in VW preferred share capital in 1H10.
BMW 3Q09E preview & results table, comment and guidance
BMW – 3Q09 comment. Auto division incurred deeper 3Q09 EBIT loss as de- stocking continued. Underlying FCF remained positive. Financial Services: financial risk marginally receded in 3Q09. Management confirmed its FY09 guidance of a group profit and a sales decline by 10-15%.
Diamler 3Q09 final results
Our estimates imply that 2011E EPS (EUR 3.01) are 21.5% below 2007’s EUR 3.83, whereas the prospective multiple 2011E of 12.2x is 8% below the historic 2007 average valuation of 13.3x.
Albeit not cheap for a stock in a sector with many more troubles ahead, Daimler is in our opinion the best car stock in Europe, and we advise to add to positions at current prices, and particularly on a pullback in the markets…
BMW 2Q/1H09E preview & results table and guidance
Our view: 2010E outlook: BMW should remain unaffected from a post-incentive hang- over in 2010 and be able to benefit from any recovery in demand globally and the US specifically. We expect that this, together with an improving model momentum (introduction of the 5-Series in 2Q10E) should lead to an EBIT of EUR 1.2bn/2.9%. However, as the dependence on FS is expected to continue to grow, BMW is becoming potentially more vulnerable to any future shocks to the global financial system.
VW 2Q/1H09E preview & results table and guidance
We expect a EUR 365m group operating profit/1.3% margin, considerably better than 1Q09’s EUR 313m, that included EUR 600m capital gains.
Renault 1H09E preview & results table and guidance
The group failed to increase market share in Europe and even lost share in France, despite an accelerating model momentum and the roll-out of several new versions of the C segment Mégane. We also detect deterioration in mix as the discount brand Dacia benefited most from government incentive schemes and saw its European sales triple in 2Q09.
Daimler – 2Q/1H09E preview & results tables and guidance
After an expected EUR 2.48 loss/share in FY09E, we expect Daimler to return to profit in 2010E (EUR 0.84 EPS): MBC’s return to profitability should not be affected by the expiry of incentive programmes and trucks should benefit from restructuring as demand stabilises at low level. At price revenue of 0.39x (2009E) Daimler shares are valued at a 20% discount to the average 10-year high (0.44x) and a 55% premium to the average 10-year low (0.25x). (See pp.5-7.)
Fiat – Earnings 2Q/1H09E preview & results tables
Management update on Chrysler and FY09 guidance. Our 2009E estimate is more cautious: a EUR 734m group trading profit
implies a net loss of EUR 644m or EUR 0.52 per share, a negative EUR 0.4bn industrial FCF and a net debt of EUR 6.65bn by YE09E.
Peugeot – 1H09E preview
We have upgraded our FY09 estimate to a EUR 1.59bn group operating loss (vs. EUR 1.71bn previously) following the new guidance for Faurecia. We confirm our estimate that the auto division will incur a EUR 1.75bn operating loss on a 11.5% decline in sales (fully cons. comps.). At price revenue of 0.10x (2009E), Peugeot shares are valued at a 27% discount to the avg. 10-year low. (See pp 4-5.)
Renault– 1H09: no cash burn despite 16.5% sales slump
Renault announced a ‘significantly positive FCF’ for 1H09, despite an expected loss. European performance remains greatly disappointing. 1H09 sales decline -16.5%; rate of decline halved qoq to 11.0% in 2Q09.
Western Europe passenger car market– July 2009 update
Car market is set for an extended V-shaped recession. Our baseline scenario of an 11.7% correction to 11.68m in 2010 is based on the assumption that the schemes in Italy and France will be extended into part of 2010, the German scheme will expire at year-end as planned, and that car manufacturers will continue to aggressively discount.
Peugeot and Fiat-Chrysler possible Merger
Peugeot – looking for a suitable partner. Industrial logic of three-way merger Fiat-Chrysler-PSA has more negatives than positives.