This is what Elkann’s Exor will celebrate with the sale of Iveco to the Chinese
The sale of Iveco to Faw, for 3.5 billion euros, would lead to Cnh, a subsidiary of Exor, a collection of over 3 billion dollars, with a prospective dividend of over 1.5 billion dollars. All the details
While from the majority and opposition there are those who invoke Golden Power , Equita Sim promotes the eventual marriage between Iveco and Faw, raising the recommendation on the title of Cnh Industrial, controlled by Exor (holding company of the Agnelli family) and in turn the parent of Iveco , from hold to buy. The target price also increased by double digits.
THE PROMOTION OF CNH INDUSTRIAL
Let's start with the news. Equita Sim, today, raised the recommendation on the Cnh Industrial stock from hold to buy, in view of the possible M&A for Iveco. The target price increases by more than 33% to 14 euros per share, writes MF-Milano Finanza .
And again: the stock also enters Equita's main portfolio, with a weight of 460 basis points.
A RICH DIVIDEND
If Iveco were to be sold to the Chinese of Faw, who put 3.5 billion on the plate for the acquisition of the Italian company, the cnh coffers would have over 3 billion dollars net, with a probable dividend of over 1.5 billions of dollars. The remaining 2 billion could be used for acquisitions in the undersized commercial vehicle segment and in the agricultural machinery segment to complete the range.
"Extraordinary post-dividend, the 2021-2022 stub would trade at a multiple ev / ebitda of 7.2 / 5.1 times and an adjusted price / profit of 14.6 / 13.9 times against 22/19 times for rival Deere ”, Reports MF Milano-Finanza.
A DEAL WITHIN THE YEAR
But what if the marriage between Iveco and Faw, hindered by parliamentarians and trade unions, were to jump ( majority and opposition ask with Golden Power to stop the sale)? In any case, the Sim expects a deal for CNH's on-highway activities within the year.
"The intervention of Italian politics, hostile to a sale of Faw to Chinese, we believe could influence the final outcome, but not prevent a deal or the spin-off of the on-highway (commercial vehicles plus powertrain, ed) in the case in which a deal for Iveco does not materialize. Postponed for the pandemic, it is reasonable to assume it within the year, ”Equita stressed.
AGRICULTURAL MACHINES: THE RECOVERY OF THE MARKET
In fact, Equita also rewards CNH for improved visibility in the agricultural machinery and commercial vehicles segment. For this business, in fact, the SIM expects a growing turnover between 2021 and 2022, at an average annual rate of + 9% and an increasing EBIT at an average annual rate of + 28% (operating leverage of 5-30 %).
THE COMMERCIAL VEHICLE MARKET
The visibility of the commercial vehicle market is also improving. According to what was declared by the CEO of Traton, Scott Wind, orders in the second half of 2020 recorded a + 21% year on year. Paccar also did well.
“The new CEO, Scott Wine, with a positive track record in Polaris, has the opportunity to finalize the relaunch of Cnh”, concluded Equita, who raised the estimates for 2021-2022.
THE FORECASTS ON CNH
According to Sim forecasts, CNH should see its turnover grow by 4%, its EBIT by 18%, with earnings per share of + 24%. Compliance with 2020 guidance is expected.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/ecco-come-exor-di-elkann-festeggera-con-la-vendita-di-iveco-ai-cinesi/ on Tue, 02 Feb 2021 14:36:12 +0000.