Global Automotive Stocks/EV Focus/Event Driven, SC Capital

SC Capital

SC Capital has over 20 years' experience covering the global automotive industry both on the Sell Side (UBS & Morgan Stanley) and Buy Side (Och-Ziff), along with a wealth of industry contacts. 

Current focus is on electric vehicle stocks & their supply chains. Aim is to identify the winners and losers from a long/short perspective. This includes close coverage of legacy automakers as well.  

From time to time. we cover opportunistic events with stocks in the manufacturing sector, food & beverage, healthcare and tech, where we also have coverage experience.

Global Automotive Stocks/EV Focus/Event Driven

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Bridgestone announces 1Q17 results on May 11th and earnings momentum could be much better than analysts' estimates. The Bloomberg consensus for 1Q operating profit (only 2 estimates) is Y96.2bn, down 11.3% YoY. Given the strong 1Q results at rivals Michelin and Goodyear, as well as the better than forecast currency environment, Bridgestone should at least beat consensus and could quite possibly see closer to flat YoY operating profit (OP). Michelin reported 1Q sales growth of +7.3% versus consensus estimates of only +3.9%, while Goodyear reported 1Q EPS that was 17% above consensus. Of the two, Michelin is the most similar to Bridgestone in terms of product line-up and geographical diversity. Reading through broker reports on Bridgestone ahead of earnings, we get the impression that the Street is being a bit too cautious, with some analysts actually having recently lowered FY17 earnings estimates for Bridgestone, despite the 36% drop in natural rubber prices since mid-February.The main factors behind a possible 1Q earnings beat at Bridgestone include brisk dealer buying ahead of 2Q price hikes in the US; firm sales of higher-end tires and highly profitable mining tires; and a better than expected currency environment.Bridgestone has outperformed Japan's Topix index by 8.9% year-to-date and is up +54% from its post-Brexit lows last June. So to some extent, while the analysts are not as bullish towards Bridgestone's earnings prospects this year, the market is expecting some blow-out numbers it seems. Anything less than consensus for 1Q would most surely spur a sell-off.FY17 should also be much better than Bridgestone or the Street is estimating. In light of spiking raw material in January--when most tire makers formulated their FY17 earnings assumptions-- Bridgestone and other major rivals announced price hikes in the US, the EU, and Japan. Since then, however, raw material prices have plunged, with natural rubber prices down 36% from mid-February peak. Lower raw material prices may cause the announced price hikes not to be accepted by all dealers, but they tend to stick more in the US, which is Bridgestone's main market. This could lead to upside in OP this year, which could translate to at least Y510bn in full year OP, which is 12% above consensus.

Bridgestone announces 1Q17 results on May 11th and earnings momentum could be much better than analysts' estimates. The Bloomberg consensus for 1Q operating profit (only 2 estimates) is Y96.2bn, down 11.3% YoY. Given the strong 1Q results at rivals Michelin and Goodyear, as well as the better than forecast currency environment, Bridgestone should at least beat consensus and could quite possibly see closer to flat YoY operating profit (OP). Michelin reported 1Q sales growth of +7.3% versus consensus estimates of only +3.9%, while Goodyear reported 1Q EPS that was 17% above consensus. Of the two, Michelin is the most similar to Bridgestone in terms of product line-up and geographical diversity. Reading through broker reports on Bridgestone ahead of earnings, we get the impression that the Street is being a bit too cautious, with some analysts actually having recently lowered FY17 earnings estimates for Bridgestone, despite the 36% drop in natural rubber prices since mid-February.The main factors behind a possible 1Q earnings beat at Bridgestone include brisk dealer buying ahead of 2Q price hikes in the US; firm sales of higher-end tires and highly profitable mining tires; and a better than expected currency environment.Bridgestone has outperformed Japan's Topix index by 8.9% year-to-date and is up +54% from its post-Brexit lows last June. So to some extent, while the analysts are not as bullish towards Bridgestone's earnings prospects this year, the market is expecting some blow-out numbers it seems. Anything less than consensus for 1Q would most surely spur a sell-off.FY17 should also be much better than Bridgestone or the Street is estimating. In light of spiking raw material in January--when most tire makers formulated their FY17 earnings assumptions-- Bridgestone and other major rivals announced price hikes in the US, the EU, and Japan. Since then, however, raw material prices have plunged, with natural rubber prices down 36% from mid-February peak. Lower raw material prices may cause the announced price hikes not to be accepted by all dealers, but they tend to stick more in the US, which is Bridgestone's main market. This could lead to upside in OP this year, which could translate to at least Y510bn in full year OP, which is 12% above consensus.

Bridgestone 1Q May Be Much Better Than Consensus

Bridgestone Corp

Bridgestone 1Q May Be Much Better Than Consensus