GKN Share Discussion Threads

[ninja 19] 31/7/2012 07:13

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TIDMGKN

RNS Number : 8578I

GKN PLC

31 July 2012

NEWS RELEASE 31 July 2012
GKN plc Results Announcement for the six months ended 30 June 2012


Management basis(1) As reported
-------------------------- -----------------------
2012 2011GBPm Change 2012 2011 Change
GBPm % GBPm GBPm %
-------------------- ------ --------- ------- ------ ------ -------
Sales 3,459 2,988 +16 3,254 2,799 +16
Operating profit
(*) 293 224 +31 301 210 +43
Profit before tax
(*) 266 200 +33 289 202 +43
Earnings per share
(*) 14.4p 10.9p +32 14.4p 10.4p +38
Interim dividend
per share 2.4p 2.0p +20 2.4p 2.0p +20
-------------------- ------ --------- ------- ------ ------ -------

[gumberr] 30/7/2012 18:20

I will confirm my guess tomorrow lol!

[ninja 19] 30/7/2012 17:03

2.20-2.30 , it will pop

[mida5] 30/7/2012 16:57

give me your best guess, I am going for £2.15

[gumberr] 30/7/2012 14:35

thats obvious lol!

[mida5] 30/7/2012 13:03

What will the price be tomorrow after the results ??

[gumberr] 27/7/2012 17:28

£2.20 next stop!

[ninja 19] 27/7/2012 16:55

Got the date wrong cheers though it would be 30th. Nevermind, more rally for us then the buying stampede on Tuesday

[libertine] 27/7/2012 16:09

Monday result will be announced on Tuesday

[ninja 19] 27/7/2012 15:52

Go go go go.


A spike till close for monday result

[gumberr] 27/7/2012 12:03

they will DRIVE out the worlds debt lol!

[valedo] 27/7/2012 10:57

Many a true word is spoken in jest !

[gumberr] 26/7/2012 15:05

GKN to takeover Europe!

[valedo] 12/7/2012 09:21

Buying shares is a bit of a casino these days but there are still some stocks which are worth "investing" in for medium/long term and this is one of them. I bought at 100p and whilst I could have made (or lost) some money trying to trade it along the way I see GKN as having a real future.

[elmfield] 11/7/2012 16:20

picked a few up today.

[gumberr] 10/7/2012 16:21

£2.20 next stop!!

[broadwood] 06/7/2012 08:31

Yep, worth reproducing.

Questor says BUY

GKN

GKN's management has waited for five years to buy the aero engine division of Volvo. All good things come to those who wait.

Yesterday, the aircraft and motor vehicle engineering group said it would buy the truck maker's non-core unit for £633m. The purchase will be funded by debt and a placing of £140m of new shares. The equity to be issued represents about 5pc of the group's market capitalisation.

Regular readers will know that Questor is not normally a fan of placings. They can be disastrous for private investors because their stake in the company is diluted and they are locked out from buying the new shares. Often, placing news causes shares to plunge.

This negative outturn for private investors was seen in the share price performance of outsourcing group Capita earlier this year. The shares are still below the level seen before it announced a £300m placing in April, which was about 6.5pc of the company's valuation at that time.

However, this is not the case with GKN. The shares soared, despite the dilution, because the purchase looks very good indeed. It is likely to boost earnings significantly. This is the "correct" sort of placing that is good for private holders of the shares, despite not being able to buy any new shares at a discount.

The Volvo unit specialises in engine parts for commercial airliners. GKN's existing aerospace business is more focused on the structural engineering of such craft. This means the fit is extremely complementary.

The commercial aircraft business globally is also growing relatively fast and the purchase means that about 37pc of its business will now be focused on the sector, with more than £2bn in revenues. This will propel GKN into the top 10 industry suppliers on completion of the deal.

The move has also sparked speculation that GKN has started a move to becoming a pure aerospace business.

The price looks good. The deal has been mooted for some time and there was talk in the market of a cost of about £800m.

GKN also issued a trading update, which showed organic sales growth was 9pc in the five months to May. In the first quarter this reading was 8pc, implying a second-quarter like-for-like increase of about 10pc.

Trading on a December 2012 multiple of just 8.3 and yielding a prospective 3.4pc, the shares were last tipped on October 20 last year. They are up 11pc since then compared with a FTSE 100 up 6pc, but are still a buy

[philo124] 06/7/2012 08:22

Telegraph, Questor Buy.

[philo124] 05/7/2012 16:57

Yes good and easy money for them; will be looking for 30% so 260p will be my
target fwiw.

[grahamburn] 05/7/2012 16:42

Looks like a good result to the placing at a reasonable price, hence no downward pressure.

[gumberr] 05/7/2012 16:29

see you at £2.20 tomorrow!

[gumberr] 05/7/2012 16:17

when GKN delivers many of the punters don't even turn up lol!!!!

[broadwood] 05/7/2012 11:27

The FTSE 100 engineer is targeting a $4tn opportunity.

This morning's news delivered confirmation that FTSE 100 (UKX) engineer GKN (LSE: GKN) is to pay £633m to buy Volvo Aero, the aero engine division of AB Volvo.

Concern over how this widely expected deal would be funded has been one of the factors keeping a dampener on GKN's share price recently. In a clear sign of the market's approval, GKN's share price rocketed by more than 8.5% when markets opened this morning, and is up by 12% as I write.


Perfect timing
Firstly, GKN's timing seems good.

The latest forecast from aircraft manufacturer Boeing (NYSE: BA.US) is that 33,500 new passenger aircraft and freighters will be needed by 2030 -- with a total value of more than $4 trillion.

Boeing expects passenger and cargo traffic to increase by 5% per year over the next 20 years, mostly thanks to surging demand from emerging markets in India and China.

Volvo Aero produces engine components for all the major aero engine manufacturers, meaning that GKN now has a significant and broad presence in the global jet engine market.

This should complement its existing aerostructure business (it builds wings for Airbus, for example) and leave it well positioned to take advantage of global demand for new aircraft.

Bet on jets
Secondly, Boeing and GKN are not the only people expecting an upturn demand for jet aircraft.

Billionaire investor Warren Buffett's ability to time his purchases to take advantages of market cycles is legendary -- and his private jet service company NetJets has just placed a $9.6bn order for 425 new planes.


Fair price
Of course, a good deal can turn bad if the price isn't right, but GKN seems to have done well in this department, too.

The £633m being paid for Volvo Aero by GKN is made up of a £513m payment for the main business, plus a £70m refinancing deal and a £50m pension settlement. This equates to 0.9 times Volvo Aero's expected sales for 2012, and 6.3 times its expected EBITDA, which doesn't seem excessive in a rising market.

GKN is paying for the acquisition with new debt and a £140m share issue, but the company says it expects Volvo Aero to make a positive contribution to the company's earnings and to generate a return in excess of its cost of capital immediately.

This should mean that the company can continue to fund its rising dividend -- good news for Foolish shareholders.

Buy GKN
Even after today's share price surge, GKN is currently valued at just 8.3 times its 2011 earnings, which I think looks cheap for such a large, diverse engineer.

Trading profit has risen by 13% so far this year on an underlying basis, and the company is planning a 20% hike in its interim dividend when it publishes half-year results at the end of this month. This should push its current 3.2% yield closer to 4%, taking it into income territory.