Equity Analyst, LightStream Research

Aqila Ali

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/27221" target="_blank" data-smartkarma-citation="entities:27221:1">Knorr-Bremse AG (KNO GR)</a> confirmed its IPO plans with the release of its prospectus, announcing that it would raise around EUR3.4bn to EUR4bn, offering shares at a price range of EUR72-87. The company expects a free float of up to 30% of outstanding share capital, assuming full exercise of its share options. Our previous insights: <a href="https://www.smartkarma.com/insights/knorr-bremse-will-the-leading-brake-supplier-go-for-an-ipo" target="_blank" data-smartkarma-citation="insights:21731">Knorr Bremse: Will The Leading Brake Supplier Go For an IPO?</a>  and <a href="https://www.smartkarma.com/insights/knorr-bremse-to-list-on-the-frankfurt-stock-exchange-by-the-end-of-this-year" target="_blank" data-smartkarma-citation="insights:24384">Knorr Bremse to List on the Frankfurt Stock Exchange by the End of This Year</a> , offer an introduction on the company, its background, and a brief financial analysis. This insight covers details on the company’s business model, its growth prospects, risks and its valuation based on the offer price range.
<table class="table table-striped">
<tbody>
<tr>
<td>
Company Name
</td>
<td>
Knorr Bremse
</td>
</tr>
<tr>
<td>
Stock Exchange
</td>
<td>
Frankfurt Stock Exchange
</td>
</tr>
<tr>
<td>
Business Description
</td>
<td>
Brake Supplier
</td>
</tr>
<tr>
<td>
New Shares Offered
</td>
<td>
43,103,479
</td>
</tr>
<tr>
<td>
Existing Shares Offered
</td>
<td>
161,200,000
</td>
</tr>
<tr>
<td>
Overallotment (Existing Shares)
</td>
<td>
5,256,521
</td>
</tr>
<tr>
<td>
Total Shares Offered
</td>
<td>
48,360,000
</td>
</tr>
<tr>
<td>
Tentative Price
</td>
<td>
EUR 72-87
</td>
</tr>
<tr>
<td>
Estimated Capital to be Raised 
</td>
<td>
Between EUR 3,481.9 million and EUR 4,207.3 million
</td>
</tr>
<tr>
<td>
Bookbuilding
</td>
<td>
October 1 to October 11
</td>
</tr>
<tr>
<td>
Listing Date
</td>
<td>
12th October
</td>
</tr>
</tbody>
</table>
<ul class="">
<li>The company operates two main segments: Rail Vehicle Systems (RVS) (47% of total FY2017 revenue) and Commercial Vehicle Systems (CVS) (53% of total FY2017 revenue). RVS segment is driven by public funding for construction and expansion of transit systems, while the CVS segment is largely influenced by economic conditions. </li>
<li>The company seems to have a good mix in its business, being able to manage the impacts of economic cycles and conditions which are beyond its control. If such a balanced mix is continued in the future, then it is safe to say that the company as a whole is less likely to suffer significantly in the event of any possible economic downturn.</li>
<li>Knorr expects medium-to-long-term growth to stem from four key megatrends: urbanisation, electrification and eco-friendliness, digitisation and autonomous driving.</li>
<li>Being a leading brake supplier in a market with high barriers to entry alongside a balanced business model with broad geographical and customer diversification, while maintaining a strong localisation culture are some of Knorr’s key strengths.</li>
<li>
Key risks Knorr is likely to face include: uncertainties with regards to backlogs and orderbooks, the emergence of new competitors and rising R&amp;D starting to affect the profitability of its business segments
</li>
</ul>

Knorr-Bremse AG (KNO GR) confirmed its IPO plans with the release of its prospectus, announcing that it would raise around EUR3.4bn to EUR4bn, offering shares at a price range of EUR72-87. The company expects a free float of up to 30% of outstanding share capital, assuming full exercise of its share options. Our previous insights: Knorr Bremse: Will The Leading Brake Supplier Go For an IPO?  and Knorr Bremse to List on the Frankfurt Stock Exchange by the End of This Year , offer an introduction on the company, its background, and a brief financial analysis. This insight covers details on the company’s business model, its growth prospects, risks and its valuation based on the offer price range.




Company Name


Knorr Bremse




Stock Exchange


Frankfurt Stock Exchange




Business Description


Brake Supplier




New Shares Offered


43,103,479




Existing Shares Offered


161,200,000




Overallotment (Existing Shares)


5,256,521




Total Shares Offered


48,360,000




Tentative Price


EUR 72-87




Estimated Capital to be Raised 


Between EUR 3,481.9 million and EUR 4,207.3 million




Bookbuilding


October 1 to October 11




Listing Date


12th October





The company operates two main segments: Rail Vehicle Systems (RVS) (47% of total FY2017 revenue) and Commercial Vehicle Systems (CVS) (53% of total FY2017 revenue). RVS segment is driven by public funding for construction and expansion of transit systems, while the CVS segment is largely influenced by economic conditions. 
The company seems to have a good mix in its business, being able to manage the impacts of economic cycles and conditions which are beyond its control. If such a balanced mix is continued in the future, then it is safe to say that the company as a whole is less likely to suffer significantly in the event of any possible economic downturn.
Knorr expects medium-to-long-term growth to stem from four key megatrends: urbanisation, electrification and eco-friendliness, digitisation and autonomous driving.
Being a leading brake supplier in a market with high barriers to entry alongside a balanced business model with broad geographical and customer diversification, while maintaining a strong localisation culture are some of Knorr’s key strengths.

Key risks Knorr is likely to face include: uncertainties with regards to backlogs and orderbooks, the emergence of new competitors and rising R&amp;D starting to affect the profitability of its business segments



Knorr Bremse IPO: History of Steady Profitability Justifies The High Multiples