European Trucks

Research evidence excerpt

European Trucks

Valuation Method and Risk Statement

The engineering sector is cyclical by nature. Our estimates and the share prices are therefore

likely to be sensitive to changes in expectations for global or regional growth and industrial

activity. Exchange rate fluctuations contribute additional risk to the sector.

Daimler Truck Holding AG:

Daimler Truck operates in cyclical markets and its profitability is sensitive to demand for

transport. Demand for Trucks is sensitive to changes in global economic activity and GDP. The

shares and our forecasts can therefore be sensitive to changes in expectations for economic

activity. FX rates are another factor that can have an impact on profitability. We value Daimler

Truck on a DCF basis.

Traton SE:

Traton operates in cyclical markets, and its profitability is sensitive to demand for transport

across the globe. Demand for transport is sensitive to changes in global economic activity and

GDP. The shares and our forecasts can therefore be sensitive to changes in expectations for

economic activity. Traton also retains significant connections with VW which places Traton at

risk of any negative events at VW. We value Traton on a DCF basis.

Volvo B:

Volvo operates in cyclical markets and its profitability is sensitive to demand for transport as

well as construction equipment. Demand for both product categories is sensitive to changes

in global economic activity and GDP. The shares and our forecasts can therefore be sensitive to

changes in expectations for economic activity. FX rates are another factor that can have an

impact on Volvo’s profitability. Large exposures are to the USD and the EUR. We value Volvo

on a DCF basis.

PACCAR Inc:

We believe a primary risk for PACCAR is that abrupt reversals in demand create a high degree