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GKN - a UK-based global engineering business (GKN)     

Juzzle - 11 Jan 2011 12:01



A FTSE-100 company with a narrow bid-offer spread. Manufactures and supplies components and vehicle
structures to automotive, aerospace, mining and agricultural industries. Approximately 39,000 people work
in GKN companies and joint ventures in more than 30 countries

sideshafts.jpgGKN corporate website - GKN investors website - Company history

(previous thread title no longer relevant, hence new thread)

Juzzle - 11 Jan 2011 12:01 - 2 of 84

"David Frost, BCC director general, told the BBC: "The manufacturing sector is growing very strongly and is a star performer, but the service sector is undoubtedly acting as a drag."

From today's reports on the UK economy. Good news for the likes of GKN and Brammer (BRAM). And Titan (TSW).

goldfinger - 16 Feb 2011 11:15 - 3 of 84

Brokers all on side... forward P/E of just 10.7 to this years end results FAR TOO CHEAP.


FORECASTS 2010 2011
Date Rec Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p)
SG Securities
15-02-11 BUY 14.72 5.00 20.53 7.50
Arden Partners
14-02-11 BUY 330.04 15.60 4.50 396.66 18.10 5.50
Evolution Securities Ltd
10-02-11 BUY 336.00 18.30 4.00 416.00 20.70 6.50
The Royal Bank of Scotland NV
25-01-11 BUY 352.40 15.54 4.50 388.00 18.04 6.00
Charles Stanley
18-01-11 HOLD
13-05-10 BUY
Nomura Research Institute [R]
27-07-09 NEUT 105.00 12.00 4.00 192.00 20.70 6.00

2010 2011
Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p)
Consensus 339.32 16.04 4.50 400.65 19.40 6.41
1 Month Change 6.54 0.54 -0.24 5.59 0.10 -0.30
3 Month Change 18.45 1.37 -0.03 22.22 1.05 -0.77

2009 (A) 2010 (E) 2011 (E)
Norm. EPS 129.05% 121.04% 20.93%
DPS % % 42.26%

2009 (A) 2010 (E) 2011 (E)

EBITDA 397.00m 576.73m 627.32m
EBIT 193.00m 364.24m 430.60m
Dividend Yield 0.00% 2.17% 3.09%
Dividend Cover x 3.56x 3.03x
PER 28.62x 12.95x 10.70x
PEG 0.22f 0.11f 0.51f
Net Asset Value PS 27.25p 82.47p 96.09p

goldfinger - 16 Feb 2011 13:07 - 4 of 84

FLASH: GKN started with buy rating at Investec, target price 243p

darreng10000 - 28 Feb 2011 10:53 - 5 of 84

Market outlook: HSBC, Pearson, ITV, GKN

Juzzle - 01 Mar 2011 08:06 - 6 of 84

Very nice results out this morning.

"..GKN's strong market positions and leading technology and the conclusion of restructuring leave us extremely well positioned for sustainable growth and margin expansion."

goldfinger - 02 Mar 2011 13:46 - 7 of 84

Edison BUY note just out.......


Valuation: Well positioned for uplift

The current rating of 10.0x CY11 EPS provides an opportunity to invest in a business that has world-leading market positioning, a strong backlog and supportive industry trends that has suffered recently from concerns regarding material costs that have proven to have, in fact, little impact on forecasts.

GKN note from Edison Investment Research - GKN's prelims showed that the rebound in global automotive demand accele...

Juzzle - 02 Mar 2011 15:03 - 8 of 84

Evolution Securities said the firm was well-placed to double its earnings per share in 2011, possibly through acquisitions, after producing a very solid set of numbers.

The market outlook remains positive and we expect further positive momentum, added Investec analyst Andrew Gollan.

HARRYCAT - 07 Jul 2011 11:42 - 9 of 84

Rumours of t/o approach from chinese manufacturer. Hence lift in sp today.

dreamcatcher - 08 Nov 2011 22:03 - 10 of 84

GKN to sell Wheels arm

Ben Harrington, 21:52, Tuesday 8 November 2011

Engineering (Milan: ENG.MI - news) company GKN (LSE: GKN.L - news) is preparing to sell its Wheels division for around 130m.

The FTSE 100 company has been talking to advisers about selling the unit which makes wheels for high power tractors, fork lift trucks and wheeled excavators. It recently appointed boutique advisory firm Gleacher Shacklock to work on the deal.

The sale process for GKN Wheels is likely to start in the New Year, said sources.

However, it is not clear why GKN has suddenly decided to offload Wheels, which sits within the company's Land Systems division.

One engineering analyst pointed out that off highway wheels manufacturing is a mature sector that generates low margins and is vulnerable to de-stocking.

"Wheels is a difficult market, so it probably makes sense to get rid of that division during this period of the cycle," said the analyst.

Recently, GKN, which traces its roots back to1759 and the birth of industrial revolution, decided to "restructure" the North American manufacturing base for its Wheels division by bringing production of hubs and spindles under one roof.

At the time, GKN said "many manufacturers of agricultural machinery prefer to purchase hubs, spindles and wheels from the same source".

GKN's Wheels division also has operations in the United Kingdom, China and Italy, according to the company's website.

Shares in GKN have been under pressure in recent weeks amid fears the company will be hit by an economic slowdown, especially in automotive production in Europe (Chicago Options: ^REURUSD - news) .

Last month the company said in a trading update that market conditions were broadly "as expected" at the time of its half year results announcement in August.

It added performance has remained strong through the seasonally weaker third quarter and "order books support further progress in the fourth quarter".

Although GKN is looking at offloading its Wheels unit, it has also been carrying out bolt on acquisitions. In July GKN paid paid 280m to acquire Getrag, a privately-owned German business that supplies all-wheel-drive transmission systems. The deal was aimed at strengthening GKN's presence in the "four by four" vehicle market.

GKN, whose shares rose 3.7 to 190.1p, declined to comment.

HARRYCAT - 29 Nov 2011 11:13 - 11 of 84

One of Britain's oldest and best-known engineering giants, GKN is once again the target of heightened bid speculation. -
The auto parts and aerospace engineer saw its shares rise almost 5 per cent yesterday as sources said Warburg Pincus-backed Quest Global Engineering was a leading contender for a bid.

The Singapore-based group has been on the acquisition trail funded by its private equity backer and wealthy Indian founder Ajit Prabhu.
About 60 per cent of GKN�s business comes from car parts and the firm (up 7.5p to 177.1p) had already been tipped as a bid target for MG owner Shanghai Automotive Industry Corporation.

Quest already has an aviation division but is not currently in the automotive business.
The engineering industry has seen a raft of consolidation in recent months, with American valve-maker Colfax buying Charter for �1.5billion, Finland�s Wartsila paying �383million for Hamworthy, and America�s Cooper Industries buying Laird for �493million.

One analyst said GKN is a logical target for a predator because �you could strip out the value� and it would benefit from �a lot of self-help�. A major barrier is its �500million pension liability which may have grown to �700million in recent months.

dreamcatcher - 01 Jan 2012 22:09 - 12 of 84

GKN (183p)

GKN, the FTSE 100 global components maker, has its fingers in many pies – automotive, aerospace, hybrid technology, developed markets, and China. Its customers include the world's biggest car makers but also Boeing and Airbus.

However, its shares declined 20pc in 2011 as the company became caught up in fears about the health of the eurozone and the impact this could have on the world's manufacturing output. Long-standing chief executive Sir Kevin Smith also announced his retirement.

An economic shock in Europe could lead to plant shutdowns similar to 2009, which caused GKN to rush to shareholders for emergency cash. But the company now appears well placed to withstand this if it happens or well placed to grow if it does not.

Despite the uncertainty, 2011 saw record global car sales. 2012 promises further growth into emerging markets for car makers and a recovery in the US, particularly for premium companies such as BMW and Jaguar Land Rover.

GKN could also enjoy the benefits of a forecast growth in civil aircraft production as Boeing and Airbus ramp up projects.

In its last trading update, GKN said automotive sales were up 10pc year-on-year, aerospace 3pc and its next-generation land systems division 23pc.

The company ended the year trading at 7.2 times 2012 earnings and a yield of 4.8pc.

GKN – the type of manufacturing business Britain needs more of – is worth supporting

halifax - 20 Feb 2012 14:01 - 13 of 84

final results due tuesday 28th february

HARRYCAT - 05 Jul 2012 08:19 - 14 of 84
GKN has agreed to acquire Volvo Aero - the aero engine division of AB Volvo - for £633m.

Volvo Aero designs, engineers and manufactures components and sub-assemblies for aircraft engine turbines.

It supplies all the major aero engine manufacturers and has positions on most major civil aerospace platforms that are set to increase as aircraft build rates ramp up.

Volvo Aero employs some 3,000 people based in Sweden, Norway and the US.

GKN chief executive Nigel Stein said: "This is a highly attractive acquisition for GKN creating a market leader in aero engine components.

"With excellent technology and strong life-of-programme positions on most civil aero engines, Volvo Aero will significantly enhance GKN Aerospace's engine components business."

The acquisition enterprise value is SKr6.9bn (£633m) comprising SKr5.6bn (£513m) of equity value (consideration) together with an anticipated Volvo Aero pension settlement (£50m) and working capital refinancing (£70m).

The acquisition is expected to complete during the third quarter, subject to regulatory approvals.

It will be funded by new debt and a £140m placing of new ordinary shares, representing approximately 5% of GKN's current market capitalisation.

HARRYCAT - 05 Jul 2012 13:43 - 15 of 84

UBS note:
"GKN believe they can drive 300-400bp of Volvo cost synergies by 2014 compared to our previous 250bp “at-best” assumption. This would mean that a) the deal is 3% earnings accretive in 2013 b) it covers pre-tax WACC in year one and c) with Volvo moving into the 11-13% Aerospace margin target range it will be accretive to group margins too. We see other benefits from this acquisition as high quality Aerospace profits become 40% of group and GKN’s technology content increases. GKN’s trading update shows growth strong across the board. Driveline margins appear weaker than expected in Q2 though but profits are helped by robust performances elsewhere. 2012 earnings are hit by deal costs though while our underlying earnings in 2013 fall 3%, split equally between updated currency & Driveline assumptions, but this is offset by 3% Volvo deal accretion.
250p price target maintained based on SOTP. Reiterate Buy".

skinny - 31 Jul 2012 07:04 - 16 of 84

Half Yearly Report

Group Highlights(1)

· Group results reflect the continued strong organic growth in all four Divisions and the contribution from acquisitions:

o Sales up 16% (£471 million) to £3,459 million, +8% on an organic basis;

· Excluding the 2011 effects of the Gallatin incident:

o Management trading (operating) profit up 19% to £293 million;

o Trading margin improved to 8.5%;

o Profit before tax increased 19% to £266 million;

o Earnings per share up 22% to 14.4 pence per share;

o Return on average invested capital reduced to 17.2% (2011: 18.1%), reflecting the 2011 acquisitions.

· Reported profit before tax of £289 million (2011: £202 million).

· Positive free cash flow of £28 million (2011: £25 million).

· Net debt of £590 million (31 December 2011: £538 million).

· Since 30 June 2012:
o Announcement of agreement to acquire Volvo Aero, significantly strengthening GKN Aerospace's engine components business.

dreamcatcher - 01 Aug 2012 17:18 - 17 of 84

Engineer GKN gained 16.5% over the month to end on 210.4p.

On 31 July, the firm announced interim sales up 16% to £3.46bn and pre-tax profits up 43% to £289m, driven largely by its auto divisions. That allowed the firm to lift its half-time dividend by 20% to 2.4p per share, and if that continues at the full-year stage, we should expect a yield of around 3.4%.

Earlier we heard of GKN's acquisition of AB Volvo's aero engine division for £633m, which was widely considered a nice price. The deal will mean that GKN makes parts for all of the world's major aero engine manufacturers, and with increases in both air passenger and freight air traffic forecasts, and demand growing for a new generation of energy-efficient power plants, this is good long-term news for GKN.

dreamcatcher - 05 Aug 2012 17:53 - 18 of 84

Sun 05 Aug 2012
First-half numbers from specialist engineer GKN beat market expectations, with pre-tax profits leaping 43 per cent. Nigel Stein, chief executive, also gave some upbeat interviews, indicating that, while many of GKN’s customers were cautious about the rest of 2012, “no one is pressing alarm buttons” about the wider economy. This is good news for GKN as many of its products are used in markets with impressive long-term growth, such as the automotive, agricultural and commercial airline industries. The numbers resulted in one of the most bearish analysts on the shares upgrading his rating to hold. Last month, GKN made a good purchase – the aero engine division of Volvo. The business specialises in engine parts for commercial airliners, so is a good fit for GKN’s operations, which is focused on structural engineering. The shares are sitting at about the same level they were following the Volvo deal announcement, after drifting for most of the last month. The results failed to give the shares a lift, but Questor still thinks the shares represent reasonable value, given the prospects for its end markets. Trading on a current-year earnings multiple of 8.5 falling to 7.3 and yielding 3.4 per cent Questor says buy.
Friday tips round-up: RSA, Robert Walters

goldfinger - 21 Jan 2013 16:15 - 19 of 84

Previously flagged this one up.

Just gone long. Got some momentum behind it.


goldfinger - 23 Jan 2013 09:00 - 20 of 84


Brokers well onside............

GKN Broker Views

Date Broker Recommendation Price Old target price New target price Notes

17 Jan Credit Suisse Outperform 244.25 255.00 255.00 Reiterates
17 Jan Oriel Securities Buy 244.25 300.00 300.00 Reiterates
15 Jan Bank of America Merrill Lynch Buy 244.25 280.00 280.00 Reiterates
11 Jan Investec Buy 244.25 224.00 275.00 Upgrades

N@P Building society.

HARRYCAT - 28 Jan 2013 12:23 - 21 of 84

UBS has reiterated its 'buy' rating for engineering giant GKN and raised its target price for the stock from 230p to 270p, saying that "life should get better" after a difficult fourth quarter.
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