UPDATE: PEUGEOT

Supportive sales, China blow out

Supportive sales, China blow out

 

  • European cars released yesterday show sales were up 6.2% in Oct for the 14th straight gain
  • Peugeot European sales rose 1.1% YoY with YTD vehicle sales up 5% to 2.43m
  • Most notable was UG’s China sales which rose a meagre 31% in October to 63.8K units! This will be a major driver going forward
  • Autos have been hit hard recently – but we are bullish into year end and through 2015, UG is our top pick
  • Tavares is doing a great job and the restructuring is still in its early stages, we expect them to be cash positive in Q4
  • Would add more around here

 

Fri, 17 Oct 2014 07:35

Faurecia results

 

  • Faurecia confirmed its guidance for 2014 as it reported a 6.5% year-on-year rise in revenue in the third quarter
  • Faurecia recorded rises in product sales in all regions where it operates, with particularly strong growth in Asia.
  • The car parts maker continues to expect an increase in revenue on a like-for-like basis of between 2% and 4% this year.
  • Very good numbers and outlook. They have also been raised to Buy vs Hold at SocGen.
  • Peugeot and faurecia been battered with the sector and mkt
  • Peugeot even more so than others in the sector. Time for the relative outperformance. Been a painful time for our Peugeot long as we have given back all our YTD gains. The Faurecia stake is worth 1.5-2bn and the company sees particularly strong growth in Asia which is half the Peugeot story. I would buy UG this morning

 

Wed, 01 Oct 2014 08:27

Peugeot +21.7% on the year. Still Bearish???

 

*PEUGEOT CITROEN SEPT NEW CAR REGISTRATIONS RISE 17%
*FRENCH SEPT NEW CAR, LIGHT-VEHICLE REGISTRATIONS RISE 7.6%

  • Peugeot brand CEO was on CNBC earlier, talking up China saying they are growing 4 times more than competitors
  • He was also positive on Europe as they are taking market share as well as improvements working from the back to the race restructuring plan
  • Still alot of bears out there. Its just the start!
  • Stay long add anywhere around EU10

 

Tue, 30 Sep 2014 14:22

European Autos down, Ford cutting 2014. Buying opportunity

 

UG FP: European autos down on back of Ford cutting 2014 pre-tax profit guidance to $6bn (vs 7-8bn prev). Citing South America, a $300m loss in Russia and $1bn in unexpected recall costs, mainly in North America. ML talking down Peugeot as part of that.

 

I see the –ve read to RNO/FIAT/VW but think any excessive move to the downside in Peugeot is a buying opportunity. Peugeot is all about Europe and China where they are taking mkt share and they also have the “Back to the Race” plan from Tavares, so have the self help restructuring angle . So far they have under promised to over deliver and I see that continuing. This is one of our favourite French names and European restructuring stories. Use any weakness below 10 as a buying opportunity as the cross read is limited except for general sentiment.

 

Wed, 30 Jul 2014 07:52

Tavares Marches On

 

Very good set of numbers. Profit at last. Not sure many can remember the last time they did that! However still hated and most don’t believe in them. Alot of big shorts still out there. Tavares doing his job of under promising to over deliver. FCF was awesome and that’s what RNO got attacked on yesterday.

Most calling them +5% or more. The way this trades and with everyone calling them +5% or more. Think we see +10% easy.

 

Wed, 18 Jun 2014 15:52

Exane 16th European CEO seminar.  BULLISH presentation from Peugeot

 

  • Conference feedback V bullish presentation by PSA
  • “We don’t want to only post good results in 14e we want to transform the company into a profitable and cash generating business”
  • Bullish presentation on pricing in Europe/Ems/China JV and royalties. Have full details if any interest
  • People have tried to talk them down on the back of them not reaching targets and overestimating what they can do. We on the other hand have felt the opposite that they have under talked in order to over deliver. Signs of that happening. Tavares is the man and will deliver.

 

Wed, 07 May 2014 15:12

Rights issue statistical study. Buy today/tomorrow

 

  • Peugeot one of our key calls in the France/CAC call
  • Been a nice trading stock in and around the rights and the re-weight
  • Now time to play them again on the long side
  • Still a great European restructuring story
  • Our Spec sits desk have done a study on the technical side of the rights trade and the study found that companies within the Consumer Discretionary industry have a average return post the rights issue of 21.42% with a 83% probability of a positive return and a 61% probability of a +10% spike.
  • The relative return in the 5 year period we covered was 14.48% on average. The cheapest day to buy is 4 days into the rights issue trading period. The recommendation is to buy UG FP around the 7th-8th May and hold for 3 months post the rights issue.

 

 Tue, 29 Apr 2014 13:58

Warrants Further Attention

 

  • Peugeot announced today its EUR1.95bn rights issue, with Dongfeng & the French government taking 14.1% a piece
  • The market has taken this well with shares up ~4%, inclusive of their new detached warrants
  • The company said it will use the proceeds of this to make important investments in implementation of its “Back in the Race” strategy
  • There is a +ve article on them in this week’s Economist which is worth a read and pushes the buy case
  • We continue to like Peugeot and believe this stock will continue to outperform as the economic backdrop improves (particularly France) and through the execution of Tavares’s strategy
  • This is still a good opportunity to buy. A study by our special sits guys suggests that companies within this sector produce an average post rights issue return of 21.4% with a 83% probability of a positive return and a 61% probability of a 10% spike. The rights will be the last supply event

 

 

Wed, 16 Apr 2014 12:47

Tavares steering in the right direction for us…

 

  • UG was hit hard on what the market perceived to be unambitious mid-term targets announced under Tavares’s “Back in the Race” plan on Monday
  • The stock is still 5% lower than pre-announcement, which we believe is an over exaggeration hindered further by a poor market backdrop
  • We believe the plan is clearly thought out; streamlining operations and targeting positive op free cash flow by 2016 at the latest. The plan is similar to those which helped Renault rebound from 2009
  • Natixis said following their recent road show “targets have been set conservatively” as Tavares wants to give the plan credibility. The targets set by Tavares will in our opinion be met well before the “Back in the Race” plan and could even see them return to profit this year
  • UG is the most leveraged to Europe where recent auto sales data have all outperformed expectations and the fleet is the oldest it has ever been
  • UG is a great medium-term European equity restructuring play. This pull back is an opportunity to get back in to the name at an interesting level
  • We are still bulls on Europe for 2014 and France in particular
  • One of our top picks for 2014. Don’t doubt Tavares

 

 Tue, 18 Mar 2014 10:38

 

  • Success of the new Peugeot 308 with 60,000 orders already booked
  • Launch of the Peugeot 308 SW in April
  • Company announced introduction of a night shift starting on 2 June 2014 -600 jobs created and 450 temporary employees recruited (Link)
  • Doesn’t sound like a company struggling
  • Still one of the most shorted stocks out there
  • RNO vs UG still a lot of catch up

 

 

  • The announcements this morning have done the job..details of the numbers look good,alot less cash burn than estimated. So far so good now over to Tavares..
  • Short interest up at ~26% and the borrow is maxed out…Lets see what Tavares says later but hopefully this is the start of the journey

 

 Tue, 18 Feb 2014 16:06

PEUGEOT….The three Lions….Time to Roar

 

  • Family/French state/Dongfeng
  • Numbers and most likely details of the rights issue tomorrow and the future direction with the three lions in charge making the Peugeot investment case compelling
  • Tomorrow should put to bed any cash flow issues
  • They’ve had a cap increase before and it didn’t go well. This time however the Chinese are there for the lot
  • Peugeot is attempting to cut its cash burn of €3bn last year by half in 2013
  • The case is becoming compelling post the rights..
  • Europe car fleet is oldest it has been. Peugeot has around half its sales in Europe so is the most exposed
  • Dongfeng will open up massive new markets to them
  • Faurecia stake worth EUR 1.8/9bn may well be +ve news around the Faurecia and Banque PSA stake tomorrow
  • With Carlos Tavares the new man from RNO in charge they have a man with the pedigree and a reputation as a go-getter to keep the plan on track
  • Clarity on the rights tomorrow and remember after the event the state will not sell, nor will the Chinese and certainly not the family
  • We prefer to own the new rather than the old. There will be some chin scratching from funds but in the end there will be only one conclusion, you have to have them.
  • Whatever happens when the rights issue is announced it will happen fast and could be the last liquidity event in this name…Be ready to act