European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

On 8 May 2021, <a href="https://www.smartkarma.com/entities/traton-se" target="_blank" data-smartkarma-citation="entities:28140:1" rel="noopener">Traton SE (8TRA GR)</a> submitted a specified request to the Executive Board of <a href="https://www.smartkarma.com/entities/man-se" target="_blank" data-smartkarma-citation="entities:21670:1" rel="noopener">MAN SE (MAN GR)</a> to convene the AGM of MAN SE to resolve on the transfer of the shares held by its minority shareholders to Traton SE.
<ul>
<li>
Traton SE currently holds 94.36 % of the share capital of MAN SE. <a href="https://www.smartkarma.com/entities/volkswagen-ag" target="_blank" data-smartkarma-citation="entities:21738:1" rel="noopener">Volkswagen (VOW GR)</a> has a c. 90% stake in Traton.
</li>
<li>
The proposed cash compensation is €70.68 (27% premium to the closing price on the last trading session prior to the news release) per both common and preference share and is addressed to c. 8.29 mn shares, for a total consideration of c. €586 mn.
</li>
<li>The announcement follows record Q1 2021 results at Traton and strong performance at MAN SE (33% increase in incoming orders and 29% increase in unit sales, 17% increase in sales revenue and €71 mn in adjusted operating result, vs negative €78 in Q1 2020 at MAN SE). MAN SE plans to cut as much as a quarter of its workforce and potentially close three factories in a restructuring plan.</li>
</ul>
The Executive Board and the Supervisory Board of MAN SE will propose to the Annual General Meeting (date TBA shortly) that a dividend of € 0.11 per ordinary or preference share be distributed for the FY 2020 (source: MAN 2020 accounts and website).
The news clearly took the market by surprise. On 10 May, MAN SE common and preference shares closed at €71.6, a 29% increase vs. the prior closing price (VWAP was €71.72, with c. €27.4 mn traded, well above the three-month average).
Gross spread is (1.15)%, including the €0.11 dividend. The market expects a sweetened squeeze-out compensation, which seems dangerous, or the resolution of a procedure. To be on the safe side, I would wait for the share price to go under €70.79 to set up any position.
<ul>
<li>
The amount of the proposed consideration should be reviewed by a court-appointed auditor.
</li>
<li>By putting revenues on the median of comparables EV/2020a sales, the implied valuation of MAN SE could be €77.3/share. There are not any Capital IQ consensus estimates for FY2021 and beyond.</li>
<li>
Dissenting shareholders may start legal action against the squeeze-out resolution, and delay the date in which it becomes effective by 5-6 months. The basis to challenge the compensation could be stronger than expected results from MAN, and the procedure can take years although it will not delay the squeeze-out. 
</li>
</ul>

On 8 May 2021, Traton SE (8TRA GR) submitted a specified request to the Executive Board of MAN SE (MAN GR) to convene the AGM of MAN SE to resolve on the transfer of the shares held by its minority shareholders to Traton SE.


Traton SE currently holds 94.36 % of the share capital of MAN SE. Volkswagen (VOW GR) has a c. 90% stake in Traton.


The proposed cash compensation is €70.68 (27% premium to the closing price on the last trading session prior to the news release) per both common and preference share and is addressed to c. 8.29 mn shares, for a total consideration of c. €586 mn.

The announcement follows record Q1 2021 results at Traton and strong performance at MAN SE (33% increase in incoming orders and 29% increase in unit sales, 17% increase in sales revenue and €71 mn in adjusted operating result, vs negative €78 in Q1 2020 at MAN SE). MAN SE plans to cut as much as a quarter of its workforce and potentially close three factories in a restructuring plan.

The Executive Board and the Supervisory Board of MAN SE will propose to the Annual General Meeting (date TBA shortly) that a dividend of € 0.11 per ordinary or preference share be distributed for the FY 2020 (source: MAN 2020 accounts and website).
The news clearly took the market by surprise. On 10 May, MAN SE common and preference shares closed at €71.6, a 29% increase vs. the prior closing price (VWAP was €71.72, with c. €27.4 mn traded, well above the three-month average).
Gross spread is (1.15)%, including the €0.11 dividend. The market expects a sweetened squeeze-out compensation, which seems dangerous, or the resolution of a procedure. To be on the safe side, I would wait for the share price to go under €70.79 to set up any position.


The amount of the proposed consideration should be reviewed by a court-appointed auditor.

By putting revenues on the median of comparables EV/2020a sales, the implied valuation of MAN SE could be €77.3/share. There are not any Capital IQ consensus estimates for FY2021 and beyond.

Dissenting shareholders may start legal action against the squeeze-out resolution, and delay the date in which it becomes effective by 5-6 months. The basis to challenge the compensation could be stronger than expected results from MAN, and the procedure can take years although it will not delay the squeeze-out. 



This Insight explains the main features of German non-voting savings shares and provides a list of the main ones traded. It mentions the reasons why preferred shareholders could be at a disadvantage in case of a takeover, and why some companies choose to offer conversion of preferred shares into ordinary shares.

This Insight explains the main features of German non-voting savings shares and provides a list of the main ones traded. It mentions the reasons why preferred shareholders could be at a disadvantage in case of a takeover, and why some companies choose to offer conversion of preferred shares into ordinary shares.

German Preferred Shares: Takeover and Conversion

Alpha-Centric ESG Research

Kyle Rudden

Imagine a sell-side analyst calls. You ignore it, of course, and the voicemail goes like this:
<blockquote>
This is Hunter from Barr, King, Seals. We're downgrading Atomic &amp; Fossil Power to a Potential Future Buy, our lowest rating. Key points are that fish-kill rates from plant effluents are way up, charitable giving is down year-over-year, and the Board is still just a bunch of old white men.
</blockquote>
Sounds absurd, doesn't it?
There's a very good reason for that.
The truth is, ESG information doesn't drive stock prices.
I'm not saying ESG performance isn’t accretive to long-term value; often it is. Rather, I am saying that ESG informational events don't have nearly the same sway as their financial equivalents.
Financial information – about profits, losses, mergers, write-downs, upgrades, downgrades, and CFOs pursuing other interests – has a direct and immediate impact on securities prices.
ESG information, on the other hand, creeps into valuations circuitously.
By definition as non-financial data, ESG is always one or more degrees of separation from what really matters. ESG must impact financial metrics before manifesting, indirectly in prices.
Put another way, ESG isn't value in and of itself; it's a catalyst for value.
It's not all rain on the parade though. Some ESG events do move prices. Additionally, as the quality and timeliness of ESG data continues to improve, markets will absorb it with increasing efficiency.
This topic, how ESG information is assimilated into stock prices, is so pertinent to ESG Alpha – the core leitmotif of my research – that I will address it as a quasi-series, starting with this report.
Rather than kick this off with a buzz kill (hint: ESG scores/ratings are lousy predictors of price), I'm starting with a kind of ESG information event that affects stocks materially in the here-and-now.
Fat-tail hitting-the-fan Enron-esque ESG-related news.
Herein, I analyze a few recent ESG events that make the cut as statistically-significant in terms of inferred causality – and a few that surprisingly don't. Though not a complete list, here are a few:
<ul>
<li>Single-stock events (PG&amp;E, Toshiba, Chipotle, Steinhoff, Equifax, Bausch Health, Kobe Steel)</li>
<li>The Volkswagen "Dieselgate" or "Emissionsgate" scandal (VW, Porsche, MAN SE, and others)</li>
<li>Danske Bank A/S and Swedbank AB getting caught up in the "Baltic Money Laundering Scandal"</li>
<li>U.S. pharmaceutical companies being sued for damages associated with the U.S. opioid crisis</li>
</ul>

Imagine a sell-side analyst calls. You ignore it, of course, and the voicemail goes like this:

This is Hunter from Barr, King, Seals. We're downgrading Atomic &amp; Fossil Power to a Potential Future Buy, our lowest rating. Key points are that fish-kill rates from plant effluents are way up, charitable giving is down year-over-year, and the Board is still just a bunch of old white men.

Sounds absurd, doesn't it?
There's a very good reason for that.
The truth is, ESG information doesn't drive stock prices.
I'm not saying ESG performance isn’t accretive to long-term value; often it is. Rather, I am saying that ESG informational events don't have nearly the same sway as their financial equivalents.
Financial information – about profits, losses, mergers, write-downs, upgrades, downgrades, and CFOs pursuing other interests – has a direct and immediate impact on securities prices.
ESG information, on the other hand, creeps into valuations circuitously.
By definition as non-financial data, ESG is always one or more degrees of separation from what really matters. ESG must impact financial metrics before manifesting, indirectly in prices.
Put another way, ESG isn't value in and of itself; it's a catalyst for value.
It's not all rain on the parade though. Some ESG events do move prices. Additionally, as the quality and timeliness of ESG data continues to improve, markets will absorb it with increasing efficiency.
This topic, how ESG information is assimilated into stock prices, is so pertinent to ESG Alpha – the core leitmotif of my research – that I will address it as a quasi-series, starting with this report.
Rather than kick this off with a buzz kill (hint: ESG scores/ratings are lousy predictors of price), I'm starting with a kind of ESG information event that affects stocks materially in the here-and-now.
Fat-tail hitting-the-fan Enron-esque ESG-related news.
Herein, I analyze a few recent ESG events that make the cut as statistically-significant in terms of inferred causality – and a few that surprisingly don't. Though not a complete list, here are a few:

Single-stock events (PG&amp;E, Toshiba, Chipotle, Steinhoff, Equifax, Bausch Health, Kobe Steel)
The Volkswagen "Dieselgate" or "Emissionsgate" scandal (VW, Porsche, MAN SE, and others)
Danske Bank A/S and Swedbank AB getting caught up in the "Baltic Money Laundering Scandal"
U.S. pharmaceutical companies being sued for damages associated with the U.S. opioid crisis



CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Equity Bottom-Up

<ul><li>Improving asset turnover, earnings on an upcycle trend, and strong stock price momentum relative to its sector</li><li>Sinotruk’s heavy-duty trucks segment should drive the sales momentum with the increasing tractor demand. 1H17 saw a remarkable revenue growth of 74% YoY</li><li>Change in regulations by Chinese government to curb overloading and emissions should boost compliant Sintotruk truck sales further</li><li>Trades at 17CE* 14.4x PE versus Asian Capital Goods at 11.8x PE, but Sinotruk offers much better earnings growth and is net cash</li><li>Risks: Heavy-duty truck demand slowdown</li></ul>* Consensus Estimates

Improving asset turnover, earnings on an upcycle trend, and strong stock price momentum relative to its sectorSinotruk’s heavy-duty trucks segment should drive the sales momentum with the increasing tractor demand. 1H17 saw a remarkable revenue growth of 74% YoYChange in regulations by Chinese government to curb overloading and emissions should boost compliant Sintotruk truck sales furtherTrades at 17CE* 14.4x PE versus Asian Capital Goods at 11.8x PE, but Sinotruk offers much better earnings growth and is net cashRisks: Heavy-duty truck demand slowdown* Consensus Estimates

Sinotruk (3808 HK): Heavy Duty Has Yielded Heavy Sales

Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Thematic (Sector/Industry)

Container Shipping - Asia Import Drive Will Boost Asia-Europe-Asia Box Profits for CarriersBackground - Space shortage has disrupted the Europe-Asia container trade in February and March and European exporters face highly unusual space crunch. This is highly unusual for a ‘back-haul’ route where ship utilization rarely reaches 70%. Carriers charged an ‘emergency minimum rate’ to accept bookings and some of them have put a stop to bookings until mid-April. Boxes already on the quay are getting…

Container Shipping - Asia Import Drive Will Boost Asia-Europe-Asia Box Profits for CarriersBackground - Space shortage has disrupted the Europe-Asia container trade in February and March and European exporters face highly unusual space crunch. This is highly unusual for a ‘back-haul’ route where ship utilization rarely reaches 70%. Carriers charged an ‘emergency minimum rate’ to accept bookings and some of them have put a stop to bookings until mid-April. Boxes already on the quay are getting…

Container Shipping - Asia Import Drive Will Boost Asia-Europe-Asia Box Profits for Carriers

Germany

MAN SE operates in the engine, commercial vehicle, and mechanical engineering industries. The Company supplies trucks, buses, diesel engines, turbomachinery, and special gear unit.

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MAN (MAN GR)

Traton SE/MAN SE: Minority Squeeze-Out

Gross spread is (1.15)%, including the €0.11 divi. The market could be expecting a sweetened squeeze-out compensation, or a challenge in courts to...

Jesus Rodriguez Aguilar

German Preferred Shares: Takeover and Conversion

This Insight explains the main features of German non-voting savings shares, why preferred shareholders could be at a disadvantage during...

Jesus Rodriguez Aguilar

ESG and Stock Prices: Fat-Tail Events

Imagine a sell-side analyst calls. You ignore it, of course, and the voicemail goes like this: This is Hunter from Barr, King, Seals. We're...

Kyle Rudden

Sinotruk (3808 HK): Heavy Duty Has Yielded Heavy Sales

Improving asset turnover, earnings on an upcycle trend, and strong stock price momentum relative to its sector Sinotruk’s heavy-duty trucks...

A. Stotz Investment Research

Container Shipping - Asia Import Drive Will Boost Asia-Europe-Asia Box Profits for Carriers

Container Shipping - Asia Import Drive Will Boost Asia-Europe-Asia Box Profits for CarriersBackground - Space shortage has disrupted the...

Drewry Maritime Financial Research

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