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Investec believes that GKN's rumoured potential takeover of Volvo Aero would be a good fit for the engineering group and maintains its buy rating on the stock. "Strategically, this is precisely the area GKN wants to expand, targeting Volvo Aero’s capabilities in the manufacture of advanced aero engine components - a growth area," Gollan said. He said that the deal would mean that Aerospace would account for around 29% of group sales, compared with 23% based on its 2013 forecasts, better balancing the group away from Automotive and into a higher margin business.
Britain's manufacturing industry could receive a shot in the arm if the British engineering group GKN succeeds in a planned swoop on Sweden's largest aerospace company that could value it at up to £800m. Although sources close to the talks say a deal is not imminent, GKN is now the clear frontrunner to buy Volvo's aero engine business after other bidders, including Germany's MTU Aero Engines, dropped out. The buyout firms Carlyle Group and Nordic Capital are also understood to have pulled back. The acquisition of Volvo Aero, which makes entire engines as well as parts for aircraft including Saab's Gripen fighter jet and had sales of £616m last year, would be a major expansion of GKN's aerospace business. It is the second largest, by revenue, of GKN's four divisions, The Guardian says.
Trade Summary Dream Scenario: The latest dividend hike off the back of double digit profits growth maintains the recent uptrend. Nightmare Scenario: The 20% post December rally means GKN shares have already factored in the latest fundamental news
Key Technicals Shares in GKN have once again backed off from 2011 resistance above 230p, but while there is no break below the 50-day moving average at 208p, the upside should see 52 week resistance at 245p.
On February 28th, automotive and aerospace engineer GKN raised its total dividend by a fifth after reporting double-digit growth in both sales and profits in 2011. Sales climbed 13% from £5,429m to £6,112m, an underlying increase of 10%. Tough trading in Aerospace had been anticipated off the back of austerity measures, nevertheless, GKN said that civil aircraft production is expected to continue to grow in 2012, with both Airbus and Boeing increasing production - enough to offset the prospective reduction in US military aircraft demand. GKN has sweetened shareholders with a dividend hike, double digit sales and profits growth, and even though the shares have risen some 20% over the past quarter, provided the price action stays above the major 50-day moving average support at 208p
Tempus in the Times takes off with aerospace and automobile engineering firm GKN. It announced a decent full year result for its automotive division yesterday and may bid for Volvo’s aerospace components business. With a share price of just nine times forward earnings Tempus thinks there may be value for patient investors. Buy.
A little coverage Automotive and aerospace engineer GKN dropped despite hiking its total dividend by a fifth after seeing double-digit growth in both sales and profits in 2011. The group did report a subdued performance in GKN Aerospace as it has struggled with governments' defence spending remaining under pressure. However, stronger growth in its Driveline, Powder Metallurgy and Land Systems divisions meant that group sales rose by 13%.
"2011 was a year of good growth. GKN achieved a strong financial performance with all four divisions at or near record profits. Each division has leading technology and market positions and out-performed their respective markets, with a strong pipeline of new business. GKN Driveline and GKN Land Systems were further strengthened with the two highly complementary acquisitions of Getrag Driveline Products and Stromag. As a result of the strong performance and reflecting our confidence in the future, the Board is recommending a final dividend of 4.0 pence per share, making a total of 6.0 pence for 2011, an increase of 20%. Looking forward, GKN expects 2012 to be another year of good progress for the Group."
Group highlights(1) · Group sales up £683 million (13%) to £6.1 billion, an underlying increase of 10% · Excluding net £19 million Gallatin charge: · Trading profit of £487 million, up £76 million, an increase of 18% · Group trading margin of 8.0%, up from 7.6%, and increased targets set for three divisions · Profit before tax of £417 million (2010: £363 million), an increase of 15%. Reported profit before tax, £351 million (2010: £345 million) · Earnings per share up 9% to 22.6 pence per share (2010: 20.7 pence per share) · Return on average invested capital (excluding 2011 acquisitions) of 18.3% (2010: 17.0%), reflecting higher profitability · Final dividend of 4.0 pence per share, giving a total for 2011 of 6.0 pence per share (2010: 5.0 pence per share), a 20% increase · Net debt of £538 million (2010: £151 million), reflecting £444 million for new acquisitions
http://www.investegate.co.uk/Article.aspx?id=201202280700282273Y
UBS raises target from 225p to 250p, buy rating kept.
UBS has raised its target price for automotive and aerospace engineer GKN to reflect an improvement in the outlook and the upside risk to its growth forecasts. The broker says that 2011 was a "turbulent year" due to the events in Japan, Gallatin and Thailand. "2012 passing without major incident would be a £50m profit boost, which in combination with pro-forma acquisition effects of £30m does not make the remaining £20m bridge in our numbers too heroic providing GKN sees some volume growth." UBS says that an improving economic outlook is bringing upside risk too.
I love the smell of engineering in the morning!
Good post. Nigel Stein is a good man to take over at the helm. All being well we should see this share rise this year.
http://www.telegraph.co.uk/finance/markets/8984420/Telegraph-share-tips-for-2012.html GKN (183p) GKN, the FTSE 100 global components maker, has its fingers in many pies – automotive, aerospace, hybrid technology, developed markets, and China. Its customers include the world's biggest car makers but also Boeing and Airbus. However, its shares declined 20pc in 2011 as the company became caught up in fears about the health of the eurozone and the impact this could have on the world's manufacturing output. Long-standing chief executive Sir Kevin Smith also announced his retirement. An economic shock in Europe could lead to plant shutdowns similar to 2009, which caused GKN to rush to shareholders for emergency cash. But the company now appears well placed to withstand this if it happens or well placed to grow if it does not. Despite the uncertainty, 2011 saw record global car sales. 2012 promises further growth into emerging markets for car makers and a recovery in the US, particularly for premium companies such as BMW and Jaguar Land Rover. GKN could also enjoy the benefits of a forecast growth in civil aircraft production as Boeing and Airbus ramp up projects. In its last trading update, GKN said automotive sales were up 10pc year-on-year, aerospace 3pc and its next-generation land systems division 23pc. The company ended the year trading at 7.2 times 2012 earnings and a yield of 4.8pc. GKN – the type of manufacturing business Britain needs more of – is worth supporting. Tipped By Graham Ruddick
A plan by one of Britain’s biggest engineering firms to create 800 jobs in Bristol has been scuppered after losing a key contract to build parts for a new Airbus jet to a South Korean rival. GKN, the £3bn aerospace and car parts manufacturer, had been favourite to land a contract to make high-tech wing components for Airbus’s revamped A320 at its plant in Filton. Despite frantic last-ditch negotiations between GKN and Airbus over the weekend, the plane maker now looks set to hand the lucrative deal to Korean Aerospace Industries instead. The lost contract deals a heavy blow to the ambitions of the coalition government, which has pledged to boost the importance of engineering and manufacturing to the economy, says The Times.
30 November 2011 GKN disposes of Aerospace Engineering Services Business The business being disposed of had sales of about 20 million pounds in the year ended 31 December 2010 and had gross assets of 8.1 million pounds as at 31 December 2010. GKN plc has sold its Aerospace Engineering Services Business in the UK and Australia to QuEST Global Services Pte Limited and QuEST Global Engineering Limited. The sale includes certain assets and liabilities of GKN CEDU Limited and the entire issued share capital of GKN Aerospace Engineering Service Pty Limited. GKN's Aerospace Engineering Services Business provides design and engineering support to a range of customers predominantly in aerospace and marine sectors. As part of the sale, QuEST Global Services Pte Limited and GKN Aerospace Services Limited have entered into a long-term preferred supplier agreement to provide the engineering skills and resources to support GKN Aerospace's long term growth strategy. GKN Aerospace retains over 200 engineers and will continue to grow its core in-house engineering skills necessary to lead future programmes and technology developments.
http://www.investegate.co.uk/Article.aspx?id=20111201070000P5913
Evolution Securities reiterated its "buy" recommendation for GKN (GKN), with a target price of 310p. The engineering group has seen no material change in trading conditions since 19th October, but the broker notes that the shares have fallen by around 15% since then. Evolution attributes this to the market assuming a slump in global car production similar to 2009, while the industry expects demand to grow by 5%. Additionally, accelerated growth in aerospace leads the broker to believe that the shares are materially undervalued. The shares grew 2.6p to 168.9p.
Thanks anyway
I wonder if any long termers can help me. I've inherited some GKN shares and I'm trying to work out the price paid. Can anyone explain why they halved in price in July 2001 and explain the 1:1 split in 2009. Were people given double the shares and the priced halved? Thanks in advance.
gkn: Investec cuts target from 250p to 240p, buy rating maintained.
GKN’s shares were on the retreat on Thursday, following yesterday’s strong rise after its third quarter statement, but Credit Suisse still maintained its outperform recommendation on the stock saying that investment case remains intact. “Our forecasts discount 12% year-on-year organic revenue growth in 2011E falling to low single digit in both 2012E and 2013E and in line with our low growth scenario for the sector,” Credit Suisse said. However, the broker said that the risk/reward balance for GKN is still attractive as the stock trades at a 30% discount to the sector, compared with an average 13% over the last five years. A 185p target price is retained.
Given the sharp decline in confidence since we last looked at GKN, the automotive and airplane parts maker has held up remarkably well, says the Investment Column in the Independent. Its third-quarter results yesterday were surprisingly good, with group sales for the three months ending 30 September up 10 per cent at £1.48bn and trading profit (before a one-off charge relating to an explosion at a plant in the US) up 13 per cent to £113m. That's not bad for a traditionally quiet quarter, particularly given the grim economic tidings. What's more the group's view on the outlook, at least in the short term, is remarkably upbeat. We said buy at 201.5p in March, having originally turned positive at 109p a year before that. The shares have slipped a bit since then but, we'd keep the faith with GKN's quality. It has continued to produce good results and is a share to back long term. The paper recommends to hold.
GKN was the worst performer on the FTSE 100 at midday on Wednesday, despite Investec expecting the market to “take comfort” in the group’s latest ‘in line’ update. “GKN is a highly volatile stock that will continue to fluctuate with global autos and broader macro concerns. However, on this update it appears the shares are pricing in a high element of caution given the group's growth potential in a benign market scenario,” analyst Andrew Gollan said. Nevertheless, the broker labelled GKN’s third quarter trading as “robust”, and maintained its buy rating and 250p target price.