Committed to professional custom CNC machined parts & precision machining services

don\'t be fooled by short-run market pessimism

by:Mingquan Machinery     2019-11-01
For short reasons
Market conditions, Martin reia (OTCPK:MRETF)
Its share price is under unfair pressure and has been trading at a low trading multiple.
Due to the industry\'s lowest profit margins, we believe that a small increase in efficiency and cost reduction may result in a 20% increase in share prices.
In addition, as car companies are gradually implementing light metals such as aluminum to reduce carbon dioxide emissions and increase miles per gallon, new regulations in the industry have always been beneficial.
OverviewMartinrea is a manufacturer and designer of automotive products with over 44 factories in North America, South America, Europe and China.
Martinrea is the first-class supplier in North America, the second largest supplier of metal molding, and the first three suppliers of fluid management systems (by revenue).
Over the past 15 years, Martin REIA has proven that its business model works in an already saturated market, with sales rising from $40mm to nearly $4 billion.
The company\'s global sales reached $3 in 2016.
$97 billion, $336mm for EBITDA and $92 for earnings. 4mm.
At present, its market value is $851.
Electric cars for $9mm and $1,513. 6mm.
Now that the company has established a name for itself in the industry by cultivating a mature operating base, the focus has now shifted to improving operational efficiency and profits.
Still, Martin REIA is expanding its 9 million square feet of manufacturing space.
Martinrea is the automatic of a diversified portfolio
Manufacturers and general purpose such as the highest monthly platform (NYSE:GM)
Jeep Wrangler Spring Equinox (NYSE:FCAU), to Ford (NYSE:F)F-
Super Duty Series
The diversity of the company\'s platform portfolio and its geographic footprint provide isolation for short sellers
Market volatility to ensure more stable cash flow.
Regulations in developed countries are promoting the development of the automobile industry.
To reduce CO2 emissions, manufacturers are producing the lightest cars they may have produced.
As a lightweight parts manufacturer, tarmac REIA and its nearest supplier of aluminum parts-
Ins makes good use of these trends. (
Source: company finance)
Industry insiders believe that there is a lot of investor uncertainty in the North American auto market.
Parts makers of Trump\'s trade policy.
So we \'ve seen players trade in low multiples (
As shown in the comps table).
While the prospect of the border adjustment test poses a legitimate threat to manufacturers operating in Mexico, political interests will make the adjustments proposed by Ryan and Bannon difficult to achieve.
Another problem with the car
Part manufacturers come from the uncertainty surrounding the changing vehicle environment and how it will affect the parts requirements.
Given the nature of the Martin REIA product, it is well insulated from the ever-changing vehicle landscape.
Global industrial revenue is expected to grow at a compound rate of 1.
Between 5% and 2021, only slight growth is expected in North America.
With the rapid growth of auto demand, most of the demand growth comes from emerging markets.
While this is the case across the industry, aluminum parts manufacturers in lightweight spaces are expected to see significant demand growth as the aluminum pound for each North American light vehicle is expected to grow at a compound annual rate of 3. 7% to 2025.
The percentage of aluminum in the total composition of the car is expected to grow at a compound growth rate of 12. 39%. (
Source: IBISWorld)
The value shown in the exhibits, which Martin REIA traded with his peers, is currently 14.
Discount of 5%
EV/EBITDA and a 2.
Discount of 3%
History P/E
Given the opportunity for profit margin expansion, its current multiples are too low and provide opportunities for long-term growth
Long-term value investment in the stock market, which is currently overvalued.
As shown in the exhibits, even given a constant multiple, a small profit expansion creates significant value creation.
It is also important to note that this is done assuming that the capital structure remains unchanged and the top is stagnantline growth.
Total Debt/EBITDA is currently only 0.
The interest coverage rate is 8 times that of 13.
9x, leaving room for a substantial increase in leverage.
Our takeout
Long-term market conditions have led to unfair low trading multiples.
With its attractive valuation, strong debt capabilities, current lower margins and relatively stable free cash flow, we believe the company has the potential to grow on a 20% basis. Our rating: buy.
Disclosure: I/we have no positions in any of the stocks mentioned and no plans to start any positions in the next 72 hours.
This article was written by myself and expressed my views.
I received no compensation (
In addition to Seeking Alpha).
I have no business relationship with any stock company mentioned in this article.
Editor\'s note: This article discusses one or more securities that are not traded on major US securitiesS. exchange.
Please note the risks associated with these stocks.
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