Alstom: Siemens-Alstom better armed against CRRC, UBS says.
(CercleFinance.com) - UBS this morning confirms its buy rating on the Alstom share, which yesterday announced its merger with the railway equipment division of the German industrial group Siemens.
Analysts still believe that the transaction will lead to significant value creation. Even though, until the deal is completed, the broker maintains its target price for the share at 34 euros.
After the conference call, UBS analysts estimate that the transaction will create around 11 euros value per share relative to the Alstom share price at close on 26 September (33.6 euros). This breaks down into 3.9 euros for expected synergies, 3.4 euros, which should result from the re-rating of the new Siemens-Alstom group, and 4 euros from an extraordinary dividend.
Siemens-Alstom, which would be 50%-owned by Siemens, will become the world's second-largest railway equipment manufacturer, with annual sales of around 15 billion euros. This represents roughly half of that of the leader, the Chinese group CRRC, on a global market that is worth 131 billion euros. It would have an operating margin of 8%, compared with 5.8% for Alstom in 2061/2017. In short, "significantly improving its competitive position versus CRRC," UBS says.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
Analysts still believe that the transaction will lead to significant value creation. Even though, until the deal is completed, the broker maintains its target price for the share at 34 euros.
After the conference call, UBS analysts estimate that the transaction will create around 11 euros value per share relative to the Alstom share price at close on 26 September (33.6 euros). This breaks down into 3.9 euros for expected synergies, 3.4 euros, which should result from the re-rating of the new Siemens-Alstom group, and 4 euros from an extraordinary dividend.
Siemens-Alstom, which would be 50%-owned by Siemens, will become the world's second-largest railway equipment manufacturer, with annual sales of around 15 billion euros. This represents roughly half of that of the leader, the Chinese group CRRC, on a global market that is worth 131 billion euros. It would have an operating margin of 8%, compared with 5.8% for Alstom in 2061/2017. In short, "significantly improving its competitive position versus CRRC," UBS says.
Copyright (c) 2017 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.