Tuesday, January 10, 2017

Fca, the new-found aggressiveness on the part of Marchionne likes to the market – Milano Finanza

The title Fiat Chrysler the Car gains another +0,50% 10,09 euro this morning in Piazza Affari (yesterday +1,4%) with Sergio Marchionne upbeat on the accounts and on the options of M&A. Yesterday during the press conference at the Detroit auto show, the group confirmed the target for 2018 (ebit adjusted at eur 9 billion, net profit to 5 billion euros and a positive net financial position of € 5 billion; estimates of the consensus are under the directions of the company: ebit at eur 6.4 billion, Icbpi 6.7 billion; negative net financial position of eur 2.7 billion, Icbpi to 3.5 billion) and the goal of sales of Jeeps to 1.9 million in 2018.

he Also reiterated is that Magneti Marelli is not strategic, then it could be sold or be the subject of a spin-off (excluding the spinf-off of the Alfa Romeo or Maserati), and the intention to leave the group at the beginning of 2019. He also anticipated that the payment of the dividend could be announced as early as this year. Signs all positive, unexpected on the front of the dividend (in their estimates, as indicated during the presentation
the last a business plan, analysts have not included any distribution of dividends).

Finally, Marchionne re-launched M&A that could materialize before 2018 and the interest for a merger with General Motors, which could also be seen positively by the president of the United States, Donald Trump. Of course there is a lot of expectation to understand the moves of the administration to Trump on industrial policies that may lead to a review of the industrial plans and production will be introduced, of the duties.

Yesterday, the Fca announced investments of us $ 1 billion in two assembly plants between Michigan and Ohio and the creation of 2 thousand jobs in the plants, Warren Truck Assembly and the Toledo Assembly Complex. “We believe that the impact of the protectionist policy of Trump on the automotive industry has yet to be evaluated. Meanwhile, the new investment of Fca in the United States confirms the strategic importance of the brand Jeep”, was the comment this morning, analysts at Banca Imi, recalling, in this perspective, the press rumors on the fact that the group may decide to produce the new Jeep Compass also in Italy, at the Pomigliano plant.

In general, “we consider positively the statements of the ceo regarding a potential dividend, already in 2017, as we believe that this confirms that the company is confident about its debt reduction path”, value, experts, Banca Imi, maintaining the rating of buy and target price at 9.1 euros on the title Fca . While remaining skeptical about the achievement of the objectives of the plan, the experts of Icbpi believe that there may still be room for an upward revision of their estimates and those of consensus.

“We can therefore confirm our positive opinion on the title to Fca : buy target price to 11,30 euro, which at current prices is expressing a multiple price/profit for the year 2017 of just 4.9 times, against an average global industry of 7.7 times”, set out to Icbpi. The main reason for the recent upgrade (rating of outperform and target price to 12 euros) Mediobanca Securities on Fca is just the most visibility on the guidance of 2018 and the “bridge” that the guidance 2017 should represent, in addition to the analysts of Mediobanca, , convinced that the numbers 2017 and 2018 will surprise the consensus and agree on the fact that 2017 will see the return of the dividend.

But according to analysts, the option of M&A remains that could create greater value compared to the current prices of the title given that the majority does not expect the target cash at the end of 2018 to be centered without the sale of assets. “After a year of relative calm, we believe that Sergio Marchionne has assumed a more offensive position in the last few months. The market loves any fantasy M&A: from the likely spin-off of Magneti Marelli to the possible merger with another player, something that this investment was totally lost in 2016″, stressed Banca Akros.

Even after the recent rally, the title Fca trading at 4.4 times the multiple is price/earnings estimated for this year when Ford and General Motors deal with an average of 6.5/7 times. “The big difference between Fca and the other two giants of the United States is that the Italian group has not generated liquidity in the past few years; if Fca demonstrated that it is able to generate cash in a way consistent with its goals and objectives by 2018, the gap evaluation may quit. It is for this reason that we still see a huge upside for the stock exchange, and confirm the rating is buy with a target price of 10 euro”, conclude the experts of Banca Akros who have the same opinion of those of Equita (buy and target price to 8,9 euro) which, however, warn: “if, in the light o f the recent evolution of some macro variables: the dollar stronger and lower pension liabilities for the rise in interest rates in the Usa, there is space to raise the rating of the Fca , we believe that the objectives to 2018 remain overly optimistic and at present we do not perceive significant changes in relation to the likelihood of M&A”.

Exane Bnp Paribas is one of the few brokers that continues to maintain a negative rating on the title, Fiat Chrysler : underperform, even if today in a report on the auto industry has raised the target price from 4.7 to 7.3 euro after improving the estimates of eps for the year 2016-2017, respectively +23% to 1.57 euros a share and +76% to 1.93 euros per share. The basis of this review the messages confident of the management of Fca with regard to the objectives to 2018, defined by Exane “ultra-ambitious”, that can’t be ignored.

In addition, “the impact of the policies of the Trump likely to extend modestly the cycle of the United States, giving to Fca a year extra cash flow generation. This has pushed us to raise so substantial estimates on the profits of the group, but more importantly on the flow of cash”, reads the note of Exane. However, the debate on this investment begins today, with the action to swap to the 10 euro once you have earned a +66% from the beginning of November. “To justify this price level, we think that investors need to believe that the margins of the Nafta area, they point to the 9-10% and quite quickly”, note the analysts of Exane.

LikeTweet

No comments:

Post a Comment