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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

GKN corporate website - GKN investors website - Company history


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

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".

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.

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.

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

Previously flagged this one up.

Just gone long. Got some momentum behind it.

GKN


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.

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.

29 Jan GKN PLC GKN Citigroup Buy 224.45 241.50 290.00 290.00 Reiterates

SP Target 290p.

01 Feb GKN PLC GKN Oriel Securities Buy 245.65 240.80 300.00 - Reiterates

SP TARGET 300p.

05 Feb GKN PLC GKN Investec Buy 247.05 247.30 275.00 275.00 Reiterates

SP Target 275p

Brokers like GKN.......

GKN Broker Views

Date Broker Recommendation Price Old target price New target price Notes

05 Feb Investec Buy 248.75 275.00 275.00 Reiterates
01 Feb Oriel Securities Buy 248.75 300.00 - Reiterates
29 Jan Citigroup Buy 248.75 290.00 290.00 Reiterates
17 Jan Credit Suisse Outperform 248.75 255.00 255.00 Reiterates
17 Jan Oriel Securities Buy 248.75 300.00 300.00 Reiterates

N@P Building Society.

12 Feb GKN PLC GKN Investec Buy 252.95 257.90 275.00 275.00 Reiterates

SP Target 275p.

Annual results

Group Highlights(1)


· Group results reflect the continued strong organic growth and the contribution from acquisitions

· Record profits achieved in all four divisions

· Sales increased 13%, up 6% on an organic basis

· Management trading (operating) profit up 19%

· Trading margin improved to 8.1%

· Profit before tax up 19%

· Return on average invested capital of 18.1% (excluding Volvo Aero)

· Earnings per share up 17%
· Final dividend of 4.8 pence per share, giving a total for 2012 of 7.2 pence per share, a 20% increase

· Reported profit before tax of £588 million (2011: £351 million)

· Positive free cash flow of £213 million (2011: £147 million), excluding Volvo Aero

· Net debt of £871 million (2011: £538 million), reflecting the acquisition of Volvo Aero.

Ex-divi tomorrow (10th Apr) 4.8p

Broker Update

2013 GKN PLC GKN Cantor Fitzgerald Buy 370.70 370.70 - 420.00 Retains

SP Target 420p.

GKN solid update this morning. Organic growth 6% ahead.

Expect broker upgrades on that.

Jefferies has kept its 'buy' rating for engineering giant GKN after the company's well-received quarterly results on Tuesday.

The broker said that in a seasonally weak third quarter, results have come in ahead of its expectations: "Apart from Land Systems, where there was an 8% organic decline in sales (1H13, -8%), everything else did pretty much what one might reasonably have expected against a trading backdrop somewhat stronger than that in 1H13, in our view."

Third-quarter sales rose to £1,865m to £1,608m the year before, ahead of Jefferies' forecast for £1,825m. Meanwhile, trading profits rose from £114m to £152m, compared with the £145m estimate.

The broker said: "We have dithered about revising our price target for GKN. Setting a price target appears to require us to formulate stances on both the micro and the macro backdrops. For now, all we would venture is that GKN's 3Q13 performance appears to be a step forward on the micro-front."

The stock was 2.21% higher at 370.5p by mid-morning on Tuesday.

Broker Updates on GKN

25 Oct 2013 GKN PLC GKN Cantor Fitzgerald Buy 373.30 376.20 420.00 430.00 Retains

25 Oct 2013 GKN PLC GKN Credit Suisse Outperform 373.30 376.20 395.00 395.00 Reiterates

StockMarketWire.com
Barclays Capital has upgraded its recommendation on global engineering group GKN (LON:GKN) to 'overweight' from 'equal weight', stating that the "stars appear to aligning" but admitted that the diversified nature of its operations make it difficult to pinpoint what is driving earnings.

The broker said: "Valuing the business is tricky, it's not quite an auto stock (although it sits in the SXAP) nor is it an A&D stock and increasingly it seems the right peers are other UK industrials. "On that basis it looks inexpensive."
Analysts have set a price target of 440 pence a share.

Separately, Liberum Capital initiated coverage of GKN with a 'buy' rating and 440 pence target in a note to investors, on Wednesday.

"GKN is cheap, has a strong balance sheet and can surprise on growth for two reasons; Driveline momentum, particularly in China, and acquisitions, which could be 11% accretive," the broker said.
"Investment in new technologies may be the icing."

"stars appear to aligning" - a well known investment ideology!?