Linear Technology reported solid fiscal third-quarter earnings but gave investors a fourth-quarter outlook that was modestly less optimistic than our expectations and indicates that customers are still quite cautious in terms of placing new chip orders. We will maintain our fair value estimate and wide-moat rating for the firm. Linear’s analog chip sales were $314.5 million for the March quarter, up 3% sequentially. After a cyclical downturn in the analog chip space, driven by a shaky macroeconomic environment, Linear began to see a bounce back in chip demand in the quarter, especially in the industrial and automotive end markets. However,…
Author: Martin Flores
Fast Retailing delivered first-half results that were impressive, showing strength globally, a rare find in our retail coverage list. The continued expansion across geographies allows the company to penetrate new audiences, and smart acquisitions like J Brand earlier this year follow suit, helping Fast Retailing reach the high-end consumer and high-end retailers in the United States en masse, previously uncharted waters for this company. In the first half of fiscal 2013, total group sales rose 17% year over year, to JPY 614.8 billion. UNIQLO Japan’s revenue grew 6.2% to JPY 387.2 billion with same-store sales of 3.6%, while UNIQLO International’s…
In the last quarter of the year, Comerica earned $128 million (or $0.68 per diluted share). This brought full-year net income to $515 million ($2.67 per share), or 32% higher year over year. Investors were pleased to see profitability inch higher, with ROE going to 7.4% in 2012 from 6.2% in 2011. The fourth quarter saw Comerica’s last charge related to the Sterling acquisition. Going forward, analysts see no major obstacle in the firm’s path that could substantially raise noninterest expenses. In addition, credit quality keeps improving. Sequentially, fourth quarter non-performing loans fell by 22% and now stand at a…
Despite a vast geographic footprint and a diverse distribution platform, Prudential’s new business sales were somewhat mixed. Sales growth in key Asian markets including Indonesia, Malaysia, and Singapore slowed significantly in the fourth quarter, a sharp contrast to the levels seen a year ago, reflecting higher competition in the region and a somewhat lower appetite for protection products among middle-class families. On the other hand, U.S. variable annuity sales at Jackson National Life increased 14% year over year, at a time when MetLife MET and other annuity writers are retreating from the market. For comparison, MetLife cut its VA sales…
Great Western Minerals Group (GWG) released its long-awaited Preliminary Economic Assessment (PEA) Monday morning. The 43-101 compliant document includes highlights of a $555 million after-tax NPV, using a TREO price deck at the mid-point of Roskill 2015 estimates, a 10% discount rate and a 28% South African business tax. The project, due to the relatively low capital expenditures required, has a 66% IRR on the above basis. Capital costs required a total of roughly $176 million, including $45 million for the refurbishment of the mine and the construction of a physical beneficiation facility, $41 million for the construction of a…
The highlight of the strategy and technology update is the AUD 800 million in estimated annual cost savings expected by the end of 2017. The business simplification and efficiency project is closely linked with leveraging technology and increasing product cross-sell in the key personal banking and wealth management divisions. Offsetting the cost savings will be approximately AUD 260 million in higher software amortisation charges by 2017. NAB’s narrow moat is underpinned by strong competitive advantages, including dominant pricing power, regulated barriers to entry, large-scale low-cost operations, access to lower-cost funding, a large sticky customer base and a highprofile well-regarded banking…
HSBC reported attributable net income of USD 13.5 billion for 2012 (USD 5.3 billion in the second half), down 17% compared with 2011. However, these headline numbers were marred by a number of special charges, including a USD 5.2 billion non-cash own-debt charge (compared with a non-cash gain of USD 3.9 billion in 2011), a USD 2.3 billion provision for redress against misselling in the U.K., and a USD 1.9 billion fine for money-laundering activities in the U.S. These charges were partially offset by USD 7.0 billion of gains on disposals in 2012. On an underlying basis, HSBC’s results show…
Belgacom reported year-end results that were slightly below expectations, but the firm provided guidance for 2013 that was quite a bit worse than projected. The firm’s reported revenue grew 0.9% year over year versus the consensus estimate of 1%. Revenue growth was primarily driven by continued gains in its broadband and television customer bases, by a strong year at BICS–its international carrier business–and by acquisitions. During 2012, Belgacom grew its broadband subscriber base by 3% to 1.24 million, its TV base by 14.5% to 1.39 million and multiplay packs by 13.6% to 1.24 million. However, this improvement was partially offset…
Covidien’s fiscal first-quarter results slightly exceeded our forecast, but we’re cognizant of several unexpected benefits that helped top-line growth in the quarter and will linger through the rest of the year. Covidien increased its revenue outlook, although its margins are unlikely to change as it will reinvest incremental revenue in its emergingmarkets infrastructure. The firm’s key strategic units delivered solid growth, although results in energy and vascular were both affected by extremely tough comparisons. Nevertheless, the highsingle- digit organic revenue expansion in both of these units was well ahead of the markets. New product launches continue to move the needle…
Rio Tinto’s fourth-quarter production was broadly as expected. Second-half exploration expenditure of almost USD 1 billion was higher than forecast. The stronger 2013 reflects increased iron ore production, higher alumina prices and improved copper production and costs. Stronger iron ore output is in line with company guidance for expansion in the Pilbara, from 2012’s record 199 million tonnes to 290 million tonnes by end 2013, and then 360 million tonnes by first half 2015. Targets are slightly improved on prior estimates as discussed below. Rio CEO Tom Albanese said “Markets remain volatile, but our business continues to perform well. Across…
Bayer reported strong third-quarter results that exceeded consensus expectations as well as our own for top-line growth as all divisions posted stronger-than expected results. Additionally, Bayer announced the $1.2 billion acquisition of Schiff Nutrition, which at 3 times forward sales estimates and 28 times forward earnings estimates appears to potentially overvalue the nutritional company. However, given the relatively small size of the deal, the likely revenue synergies of distributing the nutritionals through Bayer’s leading emerging-market platform, and the likely cost synergies in both manufacturing and marketing, we expect the deal will have a net neutral valuation impact for Bayer. Turning…
Volkswagen subsidiary Volkswagen International Finance N.V. is in the market with a benchmark three- and five-year bond offering. Volkswagen Finance issued three-year bonds in March at a spread of 114 basis points above Treasuries and five-years at +135, and these bonds are currently indicated at about 73 and 93 basis points above Treasuries, respectively. Daimler’s DAI (rating: BBB+) finance sub’s three-year bonds issued in April at a 108 basis point spread are now indicated at a spread of 113, which is fairly valued. It’s also worth noting that Honda subsidiary American Honda Finance has 2015 maturity bonds indicated at about…