Linamar Corporation REPORT Gabelli Research Analyst Matthew Paige (2-6-2018)

Linamar Corporation REPORT Gabelli Research Analyst Matthew Paige (2-6-2018)

For the full report click here:
http://www.gabelli.com/Gab_pdf/Research/Reports/LNRCN_20171204.pdf

Invest with Us 1-800-GABELLI (800-422-3554)
http://facebook.com/gabellitv
GabelliTV

Transcript:
Linamar Corporation, based in Guelph, Ontario, is a leading manufacturer of engine and transmission components primarily for use in the global automotive market.

Additionally, Linamar manufacturers aerial work platforms under the Skyjack brand and recently entered the agricultural equipment market through its December 2017 acquisition of the MacDon Group.

The company has 66 million shares outstanding, closed at 74 Canadian dollars per share for an equity market cap of 4.9 billion Canadian dollars.

We believe 2018 light vehicle demand levels will benefit from tailwinds including strong employment, GDP growth and continued consumer preference for SUVs and trucks.

This strong backdrop, along with continued OEM outsourcing of core engine products to Linamar as well as new product offerings for electric vehicles will continue to power the automotive business.

Linamar expects to continue growing its 1.1 billion dollar Aerial Work Platform business, Skyjack, in the double digit range, outperforming the estimated aerial market growth of 5-10% in 2018.

Historically, Linamar had been a dominant manufacturer of scissor lifts, maintaining 50% market share and the company’s expansion into telehandlers and boom lifts has given Linamar a leg up against industry growth rates.

In December, Linamar acquired agricultural implement manufacturer MacDon Group for 1.5 billion Canadian dollars.

MacDon is expected to contribute 150 million of annual EBITDA and will report results alongside Skyjack in the Industrial segment. Ultimately, this diversification will benefit investors through valuation multiple expansion.

We believe Linamar is best viewed on the sum of the parts basis. After assigning valuation multiples of 6x for the automotive business and 7.5x for the industrial business, both below recent comparable transactions, we calculate a 2018 Private Market Value estimate of 103 Canadian dollars per share.



Source: Gabelli TV (via YouTube)
Recommended posts powered by Google