First Read: Randoncorp "Randoncorp Day: Clear priorities amid challenging..."

研报英文原文证据摘录

First Read: Randoncorp "Randoncorp Day: Clear priorities amid challenging..."

Forecast returns

Forecast price appreciation 43.2%

Forecast dividend yield 0.7%

Forecast stock return 43.8%

Market return assumption 19.0%

Forecast excess return 24.8%

Company Description

Randon was founded in 1949. It is the largest producer of truck bodies in LatAm and the

market leader in South America in several auto parts for heavy vehicles: brake systems,

friction materials, suspension systems, fifth wheels and coupling systems. The company

also manufactures rail wagons. It sells its products in 120+ countries and has production

sites in Brazil, Argentina, Uruguay, Peru, the United States, India and China. Randon also

has a financial services division that mainly offers financing and payment plans for road

and farming equipment.

Valuation Method and Risk Statement

Our price target for Randon is based on PE multiple. The automotive industry is very

sensitive to abrupt changes in the domestic macroeconomic environment, and any

slowdown could weigh on the sector. Besides the macro effect, the sector is also exposed

to risks related to operating performance and the competitive landscape. We outline

tight credit, a lack of government incentives and labour cost inflation as the main risks to

the automotive industry in Brazil. The steel sector (and other commodities) and

underlying supply and demand are heavily influenced by trends in global economic

conditions and currency volatility, in addition to raw material price fluctuations.

Regulatory risk is also material, given continuously changing mining laws and royalty

regulations. In 2021 the sector was affected by disruptions in the global supply chain due

to COVID-19 which duration is still uncertain.