Deutsche Bank Global Autos Daily: JCI Strategic Review Meeting; Details on GM Supply Contract with AONE
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Price: $37.54 +2.48%
Rating Summary:
8 Buy, 10 Hold, 0 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Rating Summary:
8 Buy, 10 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
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Deutsche Bank Global Autos Daily
Deutsche analyst, Rod Lache, said, "We attended JCI's (NYSE: JCI)(Hold) Strategic Review and 2012 Outlook meeting in New York. We were impressed with JCI’s projection of 18%-24% earnings growth in F2012 in a relatively weak economic environment. Though JCI clearly did not incorporate “bear case” recession scenarios into their forecasts, we thought that their outlook nonetheless underscored the strong secular growth trends underlying its Power Solutions and Building Efficiency business units, and the strong strategic positioning of JCI’s Automotive Experience business...We are fine tuning our F2012 assumptions. DBe F2012 EPS is revised to $2.88 from $2.77. Approx. $0.04 of the adjustment is related to a lower tax rate assumption, and $0.07 is related to higher Building Efficiency and Power Solutions revenue. We would note that DBe reflects more conservative assumptions for N.A. and European light vehicle production—this difference should account for a $0.10 variance vs. JCI’s $2.85-$3.00 F2012 EPS guidance."
Analyst, Dan Galves, said, "A123 Systems – Details emerge on GM supply contract (Galves): GM (NYSE: GM)(Buy) announced that they would produce an electric version of the Chevrolet Spark in the U.S. and other global markets (beginning ‘13) and that A123 (Nasdaq: AONE)(Buy) will supply the battery. This is important news, as it begins to put some details around A123's supply position with GM (the previous announcement in Aug. only noted that AONE would supply batteries for a “future electric vehicle program"). The Chevrolet Spark (also known as the Beat in some markets) is GM's global A-segment vehicle (smallest car segment), and will eventually be sold in nearly all global markets (JD Power forecasts production of 565k units in 2012 for this vehicle, growing to the high 600k range in 2013, making it GM’s 3rd-highest volume vehicle). While an electric version would clearly be a very small percentage of this volume, we think it's a positive that AONE's program is part of such a high-volume platform. This announcement supports AONE's previous comments (initially made in Feb ‘11) that they will supply GM with batteries for a global electric vehicle platform produced and sold in multiple regions. We don't expect that GM will announce any initial volume targets for the vehicle, but we believe that our forecast of 15k / 20k units (approx. 2% of global volume) in 2013/14 (at $12k/battery) is reasonable, if not conservative."
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Deutsche analyst, Rod Lache, said, "We attended JCI's (NYSE: JCI)(Hold) Strategic Review and 2012 Outlook meeting in New York. We were impressed with JCI’s projection of 18%-24% earnings growth in F2012 in a relatively weak economic environment. Though JCI clearly did not incorporate “bear case” recession scenarios into their forecasts, we thought that their outlook nonetheless underscored the strong secular growth trends underlying its Power Solutions and Building Efficiency business units, and the strong strategic positioning of JCI’s Automotive Experience business...We are fine tuning our F2012 assumptions. DBe F2012 EPS is revised to $2.88 from $2.77. Approx. $0.04 of the adjustment is related to a lower tax rate assumption, and $0.07 is related to higher Building Efficiency and Power Solutions revenue. We would note that DBe reflects more conservative assumptions for N.A. and European light vehicle production—this difference should account for a $0.10 variance vs. JCI’s $2.85-$3.00 F2012 EPS guidance."
Analyst, Dan Galves, said, "A123 Systems – Details emerge on GM supply contract (Galves): GM (NYSE: GM)(Buy) announced that they would produce an electric version of the Chevrolet Spark in the U.S. and other global markets (beginning ‘13) and that A123 (Nasdaq: AONE)(Buy) will supply the battery. This is important news, as it begins to put some details around A123's supply position with GM (the previous announcement in Aug. only noted that AONE would supply batteries for a “future electric vehicle program"). The Chevrolet Spark (also known as the Beat in some markets) is GM's global A-segment vehicle (smallest car segment), and will eventually be sold in nearly all global markets (JD Power forecasts production of 565k units in 2012 for this vehicle, growing to the high 600k range in 2013, making it GM’s 3rd-highest volume vehicle). While an electric version would clearly be a very small percentage of this volume, we think it's a positive that AONE's program is part of such a high-volume platform. This announcement supports AONE's previous comments (initially made in Feb ‘11) that they will supply GM with batteries for a global electric vehicle platform produced and sold in multiple regions. We don't expect that GM will announce any initial volume targets for the vehicle, but we believe that our forecast of 15k / 20k units (approx. 2% of global volume) in 2013/14 (at $12k/battery) is reasonable, if not conservative."
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