TKA GR
thyssenkrup AG
Industrial/Transportation, Event Driven/Special Sit
04/03/2017
Presented
| Date | 03/28/2017 |
| Price | €22.69 |
| Market Cap | $14.30B |
| Ent Value | $20.91B |
| P/E Ratio | 39.11x |
| Book Value | €4.87 |
| Div Yield | 0.01% |
| Shares O/S | 565.94M |
| Ave Daily Vol | 2,296,711 |
| Short Int | N/A |
Current
| Price | €3.15 |
| Market Cap | $2.18B |
| ThyssenKrupp AG engages in the production of steel. It operates through the following business areas: Components Technology, Elevator Technology, Industrial Solutions, Materials Services, Steel Europe, and Steel Americas. The Components Technology business area offers components for the automotive, construction, and engineering sectors. The Elevator Technology business area constructs and modernizes elevators, escalators, moving walks, stair and platform lifts, and passenger boarding bridges. The Industrial Solutions business area is an international supplier in special and large-scale plant construction as well as naval shipbuilding. The Materials Services business area distributes materials and provides complex technical services for the production and manufacturing sectors. The Steel Europe business area involves in the flat carbon steel activities. The Steel Americas business area produces, processes, and markets steel products in North and South America. The company was founded on March 17, 1999 and is headquartered in Essen, Germany. |
Publicly traded companies mentioned herein: Kone OYJ (KNEBV FH), Schindler Holding AG (SHCP VX), Tata Steel Ltd (TATA IN), thyssenkrupp AG (TKA GR)
Highlights
Thyssenkrupp AG (TKA) is presently trading in the low €20s, and the presenter sees meaningful upside potential for shareholders over the next 12-24 months. On a sum-of-the-parts (SOTP) basis, the stock is “massively” undervalued, and the potential for an announcement about a spin-off of the steel business via a JV with Tata over the next 3-6 months is the near-term catalyst for the complete transformation of the business. Given its roots and history, many investors still view TKA as a steel company with poor FCF conversion. While it is true that the FCF profile is sub-par (largely attributable to the capex required on the steel side of the business), roughly 86% of 2016 EBIT was generated by capital goods (including Material Services). And, based on a 2018 P/E SOTP model using EBIT, the stock should trade up to the high-€20s/ low-€30s within 12-16 months. Looking farther out to late 2018/ early 2019, TKA’s fair value is in the low-€40s.
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