Kendrion

Kendrion

Documents

101020 Kendrion - A Magnetic Future? 101020 Kendrion - A Magnetic Future?

Kendrion has a magnetic future and shareholders of the company could have such a future as well. Firstly, it has ample room to grow its business organically. Excluding acquisitions a sharply higher share price is already justified. Secondly, when the company has a new financing arrangement in place it could give an additional boost to its valuation by making acquisitions. It targets to acquire EUR100m worth in revenues for approx 1 times sales and 6 to 6.5 times income from profits. Any investor must fell magnetized to such an investment case.

090414 Kendrion - company visit note 090414 Kendrion - company visit note

Company visit note.

101209 Kendrion - New financing arrangement in place 101209 Kendrion - New financing arrangement in place

Now with a new financing agreement in place Kendrion could give an additional boost to its valuation by making acquisitions. The current credit facility restricted the possibilities of acquisitions unless the company was willing to present an enormous equity issue to its shareholders. For more details we like to refer to our report of October 21st 2010 "Kendrion | a magnetic future".

091223 Kendrion to start operations in India 091223 Kendrion to start operations in India

In an interview management of Kendrion stated it intends to enter the market in India and targets 40% of its revenues outside of Europe in 3 years. To realize this target in geographical sales breakdown the company is condemned making acquisitions in North America.

110906 Kendrion | living on CO2 110906 Kendrion | living on CO2

No. pages 8
Description Kendrion convinced us that for the near term organic growth could remain above the threshold of 10%. Particularly the opportunities in Passenger Car Systems are huge. This business unit operates in the sweet spot of engine technology aimed at reducing the CO2 emissions per vehicle. Despite its share price appreciation of approx 65% since we issued our in-depth report 'Kendrion | magnificent magnetic future' we remain upbeat.
Contents
  • Organic growth to remain double digit
  • Reduction in CO2 emmissions driver for Passenger Car Systems
  • Ambitious growth target within reach
  • Outcome European Commission's fine expected shortly
  • Conclusions

111229 Kendrion | acquisition of FAS Control 111229 Kendrion | acquisition of FAS Control

No. pages 3
Description Not only will the acquisition of FAS Control contribute immediately to the earnings per share of Kendrion and deliver an initial return on investment of approx 13%, moreover, the takeover will offer ample opportunities for its business unit Car Passenger Systems to grow.
Contents
  • creating a platform to conquer the US market
  • estimated financial details
  • strategic importance
  • conclusions

130507 Kendrion | acquisition of Kuhnke 130507 Kendrion | acquisition of Kuhnke

No. pages 5
Description Although the acquisition of Kuhnke does not lower the exposure to the Automotive segment and Germany we cheer management of Kendrion it has added the activities of one of its nearest competitors to its portfolio. All long-term growth drivers remain in place which will offer Kendrion ample opportunity for high organic growth, strong profitability and excellent ROI. The acquisition combined with the improved organic performance should set the shares to record highs.
Contents
  • 'entering another league'
  • conclusions

140401 Kendrion | financial objectives to be realized for a prolonged period 140401 Kendrion | financial objectives to be realized for a prolonged period

 

No. pages 11
Description

In the next couple of years Kendrion will return to its financial objectives. The company has secured numerous new projects of which the order to produce solenoid valves for the damper business - its largest contract in history - is the most eye-catching one. High organic growth, strong profitability and excellent ROIC for a prolonged period will bring from the current share price an attractive long-term investment return to its shareholders.

Contents
  • Kuhnke's contribution to last year results
  • Automotive division hit by one-off setbacks
  • financial objectives still realistic and well within reach
  • other growth opportunities
  • impact EU fine on debt cover
  • valuation
  • conclusions

150911 Kendrion | magnetic moment still strong 150911 Kendrion | magnetic moment still strong

No. pages 13
Description

The company's 2Q/1H15 results were not received well by the investment community. The reasons for disappointment were its organic growth of only about 2% and the decline in EBITAE of some 7%.

Should the outcome of one single quarter change our long-term view on Kendrion?

The result of a single quarter hardly changes our long-term view. Nevertheless we have reassessed our investment case. Although we have taken a more conservative approach we remain upbeat on the company's future and thus investment case.

In this report we will analyse Kendrion's interim results. Thereafter the company's strategy and financial targets will be discussed. Lastly we will share our view and assumptions on Kendrion, resulting in our fair value assessment for its operations.

Contents

1. Introduction
2. 2Q/1H15 results not one of its best
3. Mid-term plan: "Focus on markets, markets in focus"
4. New CEO proposed
5. Valuation
6. Summary and conclusions

160405 Kendrion | focus on restoring profitability 160405 Kendrion | focus on restoring profitability

No. pages 19
Description

On May 3rd, Kendrion will provide a strategy update, including a review of its short and long-term financial objectives. Despite our belief that a couple of its targets are likely to be adjusted downward, we cheer these revisions. These likely to be revised goals provide a much more realistic picture of the future. Overall we expect the market will be pleased with the outcomes of the strategy update. These outcomes are not a  trigger for short-term outperformance. However, it does provide an excellent platform for the future. Therefore, for the long run we still believe Kendrion is a strong investment case.

Contents

1. Introduction
2. Kendrion's general financial objectives and mid-term targets
3. Kendrion's new financial objectives and mid-term targets
3.1 revenue and organic revenue growth targets
3.2 EBITA-margin and ROIC target
3.3 healthy free cash flow target
3.4 solvency and dect cover target
3.5 pay-out ratio
3.6 summary and conclusions
4. A greater emphasis on profitability
5. Valuation
6. Summary and conclusions
7. Appendix

160520 Kendrion | revised financial targets ahead of our estimates 160520 Kendrion | revised financial targets ahead of our estimates

No. pages 14
Description

On April 5th we issued a report on Kendrion ahead of its strategic update at the start of May. In that report we reviewed the company's financial objectives. We stated that we foresaw the company to revise two of its targets downward and leave all other ones unchanged.

At the presentation Kendrion's management stated to deliver an underlying EBITA-margin of 10% as from the end of 2018 and to record an organic revenue growth of on average 5% for the next three years.

These two adjustments are bang in line with our predictions. However, management was indicating financial performance could improve beyond 2018. It was most outspoken on the organic revenue growth. The company said it believed this ratio could accelerate beyond 2018.

On basis of Kendrion's projections we have fine-tuned our DCF-model. As a results we have raised our fair value per share mainly due to the steeper increase of its profitability.

Contents

1. Introduction
2. Kendrion's financial objectives
2.1 organic revenue growth of 5% on average
2.2 EBITA-margin of 10% as from the end of 2018
2.3 ROIC target to be achieved as well by 2018
2.4 all in all more realism
3. Valuation
4. Summary and conclusions
5. Appendix

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