Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Siemens (SIEM)
Industrials
Margin contraction leads to PAT-level miss; volatile sub-segment performance.
Siemens reported strong revenue growth of 24.5% yoy, broadly in line. However, sharp
EBITDA margin contraction (180 bps yoy to 9%) led to a PAT-level miss of 30% versus
estimates (Rs1.5 bn, flat yoy). We note sharp volatility in sub-segment revenue as well
as margin performance. Power transmission revenues surprisingly declined versus strong
growth in 1H while industry segment grew 13.5%. Downgrade to SELL (TP: Rs830).
Revenues in line but margins contract sharply; flat yoy PAT, 30% below estimate
Siemens reported 3QFY11 revenues of Rs28 bn, a strong growth of 24.5% yoy - broadly in line
with our estimates. EBITDA margin recorded a sharp contraction to 9%, down 180 bps yoy and
about 300 bps below our estimates. The margins have also recorded a steep sequential
contraction by about 530 bps primarily. The sharp EBITDA margin contraction led to flat yoy PAT in
1QFY12 of Rs1.5 bn, 30% below our estimate of Rs2.25 bn.
T&D revenues down yoy versus strong 1H growth; mobility continues to decline
Power sales grow 22% on strong fossil power generation and O&G revenues,
transmission surprisingly declines. Power sales also grew 22% to Rs14.7 bn though
transmission segment sales at Rs7.4 bn (accounts for half of power sales) declined 9% yoy.
Power Transmission sales had grown 56% during 1HFY11. Fossil power generation may have
grown on back of execution of large orders from Torrent group.
Industry grows 13.5%; mobility sub-segment continues to decline. Industry sales growth
(13.5% to Rs12.2 bn) was led by building technologies (54% growth to Rs2.2 bn) and Industry
automation (up 36% to Rs2.1 bn). Mobility segment sales declined by 29% to Rs1.3 bn and
industry solutions segment reported marginal growth of 4.4% to Rs3 bn.
Sub-segment level margins seesaw sharply even versus sequential quarter
Sub-segment margins demonstrate significant volatility even on a sequential basis: (1) Lower
industry solution margins of 2.4% in 3QFY11 from 9.7% in 2QFY11, (2) 6% EBIT loss in fossil
power generation versus EBIT profit of 16% in 2QFY11, (3) almost nil EBIT margin in distribution
versus above 10% in 2QFY11 and (4) 1% margin in the healthcare from 10% in 2QFY11.
Revise earnings estimates, target price to Rs830/share; downgrade to SELL
Revise estimates to Rs28.9 and Rs32.5 (from Rs31.7 and Rs33.6) for FY2011E-12E. Downgrade to
SELL (from REDUCE) with a revised TP of Rs830 (from Rs860) as (1) high valuations unjustifiable given
volatile performance, (2) difficulty in judging core performance and (3) weak pricing environment.
Revenues in line but margins contract sharply; flat yoy PAT, 30% below estimate
Siemens reported 3QFY11 (fiscal year-ends September 30, 2011) revenues of Rs28 bn
recording a strong growth of 24.5% yoy, from Rs22.4 bn in 3QFY10 - broadly in line with
our estimates. The strong revenue growth is likely led by pick-up in execution of the existing
order backlog.
EBITDA margin recorded a sharp contraction to 9%, down 180 bps yoy and about 300 bps
below our estimates. The yoy contraction in margins was primarily on higher raw material
expenses as a percentage of sales. The margins have also recorded a steep sequential
contraction by about 530 bps primarily on higher other expenses (at Rs2.15 bn, up 72.6%
qoq). The sharp EBITDA margin contraction led to flat yoy PAT in 1QFY12 despite the strong
revenue growth. Siemens reported a 1QFY12 net PAT of Rs1.5 bn, about 30% below our
estimate of Rs2.25 bn.
For the nine months ended June 30, 2011, Siemens reported a strong revenue growth of
33% yoy to Rs84.5 bn. Margins for the period contracted by about 150 bps yoy leading to a
9MFY11 net PAT of Rs6.8 bn, up 18% yoy from Rs5.7 bn in 9MFY10.
T&D revenues down yoy versus strong 1H growth; mobility continues to decline
The 3QFY11 revenue growth was primarily led by the Fossil power generation (revenues
growth 6X) and the Oil & Gas segment (revenues double yoy). These two segments together
contributed to about Rs3 bn of the incremental revenues (of about Rs5.5 bn). Industrials
segment cumulatively contributed about Rs1.5 bn to the incremental revenues.
Power sales up 22% on back of fossil power generation and O&G, transmission
surprisingly declines
Power segment (Fossil power, O&G, Power T&D) sales grew by 22% yoy to Rs14.7 bn in
3QFY11. However power transmission segment (accounts for about half of the power
segment) reported a yoy decline in revenues of Rs7.4 bn, down 9.2% yoy. Note that this
segment sale had recorded a very strong growth of 56% yoy in 1HFY11. The extremely
strong growth seen in fossil generation segment (revenues of Rs1.5 bn from Rs255 mn last
year) may have grown on back of execution of large orders from Torrent group.
Industry grows 13.5% as mobility sub-segment continues to decline
Industry segment cumulatively reported revenues of Rs12.2 bn, up 13.5% yoy. The growth
was led by the building technologies segment (54% growth to Rs2.2 bn) and industry
automation segment (growth of 36% to Rs2.1 bn). Mobility segment sales continued to
decline (as seen in 1H), down 29% yoy to Rs1.3 bn and industry solutions segment reported
a marginal growth of 4.4% to Rs3 bn.
Sub-segment level margins seesaw sharply even on a sequential basis
Siemens reported a 108 bps yoy decline in EBITDA margin to 9% in 3QFY11 and about 300
bps lower than our estimates. Reported EBIT margin seesawed across the various segments
even on a sequential basis. Margin decline and its volatile nature is demonstrated by:
Lower industry solution margins of 2.5% in 3QFY11 versus 9.7% in 2QFY11
EBIT loss in the fossil power generation segment of 6% versus 16% profit in 2QFY11
Low EBIT margin of only 1% in the distribution segment versus above 10% in 2QFY11
(about 6.8% in 3QFY10)
1% EBIT margin in the healthcare segment versus 10% in 2QFY11
Revise earnings estimates, target price to Rs830/share; downgrade to SELL
We have revised our earnings estimates to Rs28.9 and Rs32.5 from Rs31.7 and Rs33.6
earlier for September year ending 2011E and 2012E, respectively. We have correspondingly
revised our target price to Rs830/share (from Rs860 earlier) based on 24X March-13E
earnings.
We downgrade our rating on the stock to SELL (from REDUCE) based on (1) high valuations
unjustifiable given volatile nature of business performance, (2) incremental difficulty in
judging the performance of the core business and (3) increasing competition in the power
segment with competitors such as Areva, Crompton and Hyosung scaling up presence
leading to market share as well as price challenge.
Key upside risks arise from better-than-expected order booking, revenue growth and
margins leading to positive earnings surprise.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Siemens (SIEM)
Industrials
Margin contraction leads to PAT-level miss; volatile sub-segment performance.
Siemens reported strong revenue growth of 24.5% yoy, broadly in line. However, sharp
EBITDA margin contraction (180 bps yoy to 9%) led to a PAT-level miss of 30% versus
estimates (Rs1.5 bn, flat yoy). We note sharp volatility in sub-segment revenue as well
as margin performance. Power transmission revenues surprisingly declined versus strong
growth in 1H while industry segment grew 13.5%. Downgrade to SELL (TP: Rs830).
Revenues in line but margins contract sharply; flat yoy PAT, 30% below estimate
Siemens reported 3QFY11 revenues of Rs28 bn, a strong growth of 24.5% yoy - broadly in line
with our estimates. EBITDA margin recorded a sharp contraction to 9%, down 180 bps yoy and
about 300 bps below our estimates. The margins have also recorded a steep sequential
contraction by about 530 bps primarily. The sharp EBITDA margin contraction led to flat yoy PAT in
1QFY12 of Rs1.5 bn, 30% below our estimate of Rs2.25 bn.
T&D revenues down yoy versus strong 1H growth; mobility continues to decline
Power sales grow 22% on strong fossil power generation and O&G revenues,
transmission surprisingly declines. Power sales also grew 22% to Rs14.7 bn though
transmission segment sales at Rs7.4 bn (accounts for half of power sales) declined 9% yoy.
Power Transmission sales had grown 56% during 1HFY11. Fossil power generation may have
grown on back of execution of large orders from Torrent group.
Industry grows 13.5%; mobility sub-segment continues to decline. Industry sales growth
(13.5% to Rs12.2 bn) was led by building technologies (54% growth to Rs2.2 bn) and Industry
automation (up 36% to Rs2.1 bn). Mobility segment sales declined by 29% to Rs1.3 bn and
industry solutions segment reported marginal growth of 4.4% to Rs3 bn.
Sub-segment level margins seesaw sharply even versus sequential quarter
Sub-segment margins demonstrate significant volatility even on a sequential basis: (1) Lower
industry solution margins of 2.4% in 3QFY11 from 9.7% in 2QFY11, (2) 6% EBIT loss in fossil
power generation versus EBIT profit of 16% in 2QFY11, (3) almost nil EBIT margin in distribution
versus above 10% in 2QFY11 and (4) 1% margin in the healthcare from 10% in 2QFY11.
Revise earnings estimates, target price to Rs830/share; downgrade to SELL
Revise estimates to Rs28.9 and Rs32.5 (from Rs31.7 and Rs33.6) for FY2011E-12E. Downgrade to
SELL (from REDUCE) with a revised TP of Rs830 (from Rs860) as (1) high valuations unjustifiable given
volatile performance, (2) difficulty in judging core performance and (3) weak pricing environment.
Revenues in line but margins contract sharply; flat yoy PAT, 30% below estimate
Siemens reported 3QFY11 (fiscal year-ends September 30, 2011) revenues of Rs28 bn
recording a strong growth of 24.5% yoy, from Rs22.4 bn in 3QFY10 - broadly in line with
our estimates. The strong revenue growth is likely led by pick-up in execution of the existing
order backlog.
EBITDA margin recorded a sharp contraction to 9%, down 180 bps yoy and about 300 bps
below our estimates. The yoy contraction in margins was primarily on higher raw material
expenses as a percentage of sales. The margins have also recorded a steep sequential
contraction by about 530 bps primarily on higher other expenses (at Rs2.15 bn, up 72.6%
qoq). The sharp EBITDA margin contraction led to flat yoy PAT in 1QFY12 despite the strong
revenue growth. Siemens reported a 1QFY12 net PAT of Rs1.5 bn, about 30% below our
estimate of Rs2.25 bn.
For the nine months ended June 30, 2011, Siemens reported a strong revenue growth of
33% yoy to Rs84.5 bn. Margins for the period contracted by about 150 bps yoy leading to a
9MFY11 net PAT of Rs6.8 bn, up 18% yoy from Rs5.7 bn in 9MFY10.
T&D revenues down yoy versus strong 1H growth; mobility continues to decline
The 3QFY11 revenue growth was primarily led by the Fossil power generation (revenues
growth 6X) and the Oil & Gas segment (revenues double yoy). These two segments together
contributed to about Rs3 bn of the incremental revenues (of about Rs5.5 bn). Industrials
segment cumulatively contributed about Rs1.5 bn to the incremental revenues.
Power sales up 22% on back of fossil power generation and O&G, transmission
surprisingly declines
Power segment (Fossil power, O&G, Power T&D) sales grew by 22% yoy to Rs14.7 bn in
3QFY11. However power transmission segment (accounts for about half of the power
segment) reported a yoy decline in revenues of Rs7.4 bn, down 9.2% yoy. Note that this
segment sale had recorded a very strong growth of 56% yoy in 1HFY11. The extremely
strong growth seen in fossil generation segment (revenues of Rs1.5 bn from Rs255 mn last
year) may have grown on back of execution of large orders from Torrent group.
Industry grows 13.5% as mobility sub-segment continues to decline
Industry segment cumulatively reported revenues of Rs12.2 bn, up 13.5% yoy. The growth
was led by the building technologies segment (54% growth to Rs2.2 bn) and industry
automation segment (growth of 36% to Rs2.1 bn). Mobility segment sales continued to
decline (as seen in 1H), down 29% yoy to Rs1.3 bn and industry solutions segment reported
a marginal growth of 4.4% to Rs3 bn.
Sub-segment level margins seesaw sharply even on a sequential basis
Siemens reported a 108 bps yoy decline in EBITDA margin to 9% in 3QFY11 and about 300
bps lower than our estimates. Reported EBIT margin seesawed across the various segments
even on a sequential basis. Margin decline and its volatile nature is demonstrated by:
Lower industry solution margins of 2.5% in 3QFY11 versus 9.7% in 2QFY11
EBIT loss in the fossil power generation segment of 6% versus 16% profit in 2QFY11
Low EBIT margin of only 1% in the distribution segment versus above 10% in 2QFY11
(about 6.8% in 3QFY10)
1% EBIT margin in the healthcare segment versus 10% in 2QFY11
Revise earnings estimates, target price to Rs830/share; downgrade to SELL
We have revised our earnings estimates to Rs28.9 and Rs32.5 from Rs31.7 and Rs33.6
earlier for September year ending 2011E and 2012E, respectively. We have correspondingly
revised our target price to Rs830/share (from Rs860 earlier) based on 24X March-13E
earnings.
We downgrade our rating on the stock to SELL (from REDUCE) based on (1) high valuations
unjustifiable given volatile nature of business performance, (2) incremental difficulty in
judging the performance of the core business and (3) increasing competition in the power
segment with competitors such as Areva, Crompton and Hyosung scaling up presence
leading to market share as well as price challenge.
Key upside risks arise from better-than-expected order booking, revenue growth and
margins leading to positive earnings surprise.
No comments:
Post a Comment