Tuesday, September 30, 2014

Electrolux eluxy Doubles US Market Share (whirlpool whr), Jaguar Tata Motors ttm Organic Growth China luxury vehicle market

If you're into retail stocks here's one to consider -  Electrolux eluxy aka Sweden's version of Whirlpool is taking the US by storm.  On September the 8th it acquired General Electric's (ge.n) appliances business for $3.3 billion (7 times ebitda multiple).  The move doubles Electrolux's market share in North America ($4.0 billion in sales -> $10.0 billion) putting it in direct competition with market leader Whirlpool whr.n.

Electrolux is already the number two player worldwide but this deal means a lot given that the US is the world's third largest market for sales of major appliances (2013: 28% of Electrolux sales come from Europe vs 32% stateside).. also note that American demand for appliances is estimated to grow by 9% in 2014 (up from previous estimate 7%).  And don't forget about the $300 million in synergy cost savings.. increased profitability right off the bat !  Less competition in the industry could mean higher prices - but even if that doesn't happen, Electrolex will undoubtedly have more control over the market price of its products.
jaguar unit sales, blackberry corporations, passport sales, major appliance stocks, the classic, electrolux competition,

Electrolux was doing well in North America even before this move - organic growth there is at 7% compared to 0.4% in Europe.  Whirlpool has a market value 40% greater than Electrolux despite having similar revenue;  Electrolux quarterly profit though has been wildly inconsistent.  Annual earnings are comparable to Whirlpool with the exception of 2013 ($827 million vs $93 million) but don't let that bother you - Electrolux is expanding rapidly in emerging markets (also a gradual move in production to low cost regions is estimated to boost 2014 earnings by a hefty $284 million) and the costs associated with that process have been high but, by establishing itself early in those regions Electrolux is setting itself up for the future (and gaining an edge over the competition).

Tata Motors is growing.. very fast

Tata Group (private) is perhaps India's most diversified company.  It sells beverages such as coffee and mineral water, generates electricity for public use, mines salt, manufactures automobiles (both high and low end), provides telecommunications services in India (Virgin Mobile India), is a service company (hotels, airasia, financial services).  Its largest publicly traded subsidiary is Tata Motors nyse:ttm.  In 2012 the auto division was worth $15.2 billion, today it's at $25.2 billion (all organic growth !).

Despite no major acquisitions over the last few years, auto division Tata Motors finally appears to have an asset capable of providing organic growth.  In 2008 it acquired struggling automarker Jaguar Land Rover from Ford for $2.3 billion (today the Jaguar unit represents 95% of Tata Motors' valuation which translates into $23 billion !).  The deal instantly gave Tata a foothold in overseas markets (a plus for a company looking for international recognition) but unbeknownest to Tata, sales at Jaguar Land Rover didn't need much of a push to take off  - between 2009 and 2013 auto sales doubled to 425,000 units ; with 18.8% yoy growth last year.  In 2013 global sales of Jaguar models was up 37% (North America +50% vs -6% the previous year).  Demand from China will have a tremendous impact on future growth (is currently the leading market for Jaguars; will push unit sales up to 1 million by 2020).  Last fiscal year China accounted for 24% of Jaguar Land Rover sales vs 21% the year before.
China is embracing Tata Motors and why not ?  The country has low current luxury ownership rates, rising proportion of affluent individuals, and a strong affinity for premium brands.  
Currently Jaguar represents 7% of all luxury vehicle sales in China (luxury vehicle market); estimates show China's total demand will reach three million by the end of the decade, Tata will account for at least 250,000 units, if its share increases then expect auto sales to rise markedly.
more..  Tata makes electric vehicles and owns South Korea's second largest manufacturer of heavy commercial vehicles (Daewoo has been a part of Tata Group since 2004).  On the flip side Tata Motor's low end passenger vehicle business has fared poorly (sales in India of its own makes including the Tata Nano and Zest are down 33% so far this year 88th -> 58th) but the company is committed to reviving it and has the assets to accomplish that ($7 billion cash, a parent company that both operates leading European and Indian engineering technical institutes and even mines/fabricates the steel used in its cars).

Tata Motors stock price change : 1 mo -10%, 3mo +13%, 6mo +9%

Magna International Expands In India (nyse: MGA)

The largest auto parts marker in North America makes Asia a priority
September 29, 2014 - Magna announces plans for two new facilities to be built in Gujarat, India.  The plants will produce seat systems and body and chassis systems.  Magna already produces various parts in India for GM, Ford, and Nissan.

BlackBerry nasdaq: BBRY Passport Sales Are Off To An Impressive Start (blackberry corporations)

This month, BlackBerry bbry released a brand new device for the first time in two years - the Passport is noticeably wider than what the competition is offering, but is that necessarily a bad thing ? considering it's specifically targeting corporations (suits and dress shirts usually have more than one big pocket, don't they ?).  It may be a tight fit but at least the phone doesn't bend.  

This device also has a keyboard (three built in rows, when needed the fourth row comes up automatically on the touch screen).  So how does it compare to the iphone 6 ?  well for starters, it does have a quad processor and 1440x1440 resolution.

In the first two days of its launch, bbry sold 200,000 units of the Passport
Initial shipment of passport smartphones reportedly sold out
Extrapolated over the upcoming 12 week quarter (3q2014) the boost in shipments should be enough to satisfy investors lamenting the 2.4 million BlackBerry devices sold in the 2nd quarter.  With the release of the Classic towards the end of 2014, BlackBerry shipments should beat full year estimates.

In the second quarter BlackBerry
- posted revenues of $916 million (vs $1570 million) 46% hardware, 46% services, 8% software.
- losses were down which is good ($207 million vs $965 million).  BBRY actually made a profit in the first quarter ($23 million).
- BBM mobile messaging users up to 91 million (vs 85 million).

Corporations continue to show interest in BlackBerry

The trust factor - BBRY can keep information secure to an acceptable government standard, unlike competitors Google and Apple Inc.

The QNX operating system, which BlackBerry owns is the OS of choice for most automobile software and is set to replace Microsoft in Fords, if it hasn't already.

Convenience - Apple devices, iPod and iPad, are not compatible with Windows PC or laptop, by design Apple forbids using MP3 music from your PC.

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