Research Dynamics
Report on Schaffner Holding AG: Investor’s Day Update (news with additional features)
DGAP-News: Research Dynamics / Key word(s): Research Update Uncertain scenario weighing on outlook Management maintains “Strategy 2020” targets Management currently is prioritizing to cut costs, while at the same time investing into the most promising growth technologies such as in Power Quality and Automotive. The first is being targeted by consolidating production facilities and cutting overhead costs. The group thus plans to continue with only one factory each in the US, Europe, China and Thailand. Further, it is transferring more of production (mostly from Shanghai) to its Thailand factory, which is the lowest cost production facility for the company. These initiatives should help Schaffner in reducing its production and overhead costs by CHF 6 million annually. The company’s external growth plans seem to have currently been put on the back burner as management concentrates on improving efficiencies and reducing costs, as well as a lack of suitable acquisition targets. Though management remains open to acquisitions in the range of CHF 20 – 70 million, nothing is imminent not least due to current uncertain market scenarios. Automotive and Power Quality to drive growth Management priority for the next twelve months EMC: – Execute COGS and overhead cost reduction. – Gain market share in all regions to expand Schaffner’s lead Power Quality: – Complete the development of Generation 2 product platforms – Launch and global roll-out of new products Power Magnetics: – Complete restructuring of division and reduce break-even – Diversify customer base and return to growth Automotive: – Win customer RFQ to further expand market share in keyless entry – Develop innovative EMC filter solutions for market introduction in 2017 – Manage volume ramp up at Thailand plant Valuation Schaffner’s share price has been moving higher over the past few months, supported by the overall rise in global markets. The company is going through yet another transitory phase where it is undertaking several restructuring steps to reduce costs. Due to the low profitability in 2016, we compare the group’s valuations based on 2017 earnings expectations. Based on an 2017E EV/EBITDA basis, the company is at par with its product peers (discount to industry peers). However, looking on a PE basis, the stock is trading in line with its 3-year historical average. Its 2017E PE is at a premium to its peer group, which can be attributed to the transition year. Given management’s confidence on execution, we believe a discount to peers at the EV/EBITDA level is not necessarily warranted. Additional features: Document: http://n.eqs.com/c/fncls.ssp?u=GJHAVRTWAX Document title: Schaffner Investor Day
2016-06-10 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG. |