Matter of Fact – w/c 20th April 2015


1.    AutoNation sales outpace the market

2.    N Brown Earnings

3.    Winnebago Industries – Short-term headwinds, Long-term appeal

4.    AGCO EPS Expectations ‘Far Too High’: Deutsche

5.    PACE PLC – Radical changes in media consumption are not slowing down

6.    Insider with Kubota

7.    Tokyo Electron falls in TSMC capex cuts

8.    Apogee Posts Stronger-Than-Expected Results

9.    Praxair Surface Technologies Receives Nadcap Accreditation for Coatings…


Full focus list (click here)



1. AutoNation sales outpace the market [Click here to view] Seeking Alpha – April 7th, 2015

  • After a spectacular run during the economic recovery, the auto industry seems to be returning to a more sustainable rate off sales
  • March sales were more or less flat, after a good showing in the first two months of the year
  • AutoNation nevertheless delivered strong sales, outpacing the overall industry.

QMG Opinion AutoNation (AN US) sits within our Auto Retailers (US50.1) product group. While consensus sales forecasts appear to be priced in, the data shows significant upside with respect to margins (+125bps vs. consensus -13bps). Volumes remain the key driver of the positive product group performance, leading to yoy sales growth of +7.2%. The company reports on 22/04/15 – and the data shows an opportunity for AN US to outperform given the healthy demand evident in the March update which is in line within QMG’s data insights.


2. N Brown Earnings [Click here to view] N Brown Website – April 8th, 2015 N Brown (BWNG) to provide preliminary announcement on 29th April 2015 per Company website

QMG Opinion N Brown – will report its prelim statement at the end of April and the key concern is whether the company at least meet market expectations. QMG’s data on mail order & internet (UK52.61) remains particularly strong  – volume growth is robust (+20.6%) and margin trends remain positive, leading to sales growth of +18.1% – the best in the UK market. While stock specific issues are more difficult to identify in this volatile product group, N Brown are an experienced player with a solid platform, so if overall trends in the market persist, it is logical to assume that N Brown should benefit if they can resolve communication to street and simply meet lowered estimates.


3. Winnebago Industries – Short-Term Headwinds, Long-Term Appeal [Click here to view] Seeking Alpha – March 30th, 2015

  • Winnebago Industries continues to see margin pressure following tight labor conditions and strategic investments.
  • Accelerating sales growth and prospects for margin stabilization could improve appeal going forwards.
  • Long-term tailwinds, a fairly appealing valuation and strong balance sheet drive appeal if margins stabilize

QMG Opinion Manufacturers of Vehicle bodies, trailers & caravans (US34.2) have consistently screened well per QMG Insight data over the past year with Winnebago being one of the main listed equities here. Our data highlights that product group sales are growing at +24% vs. consensus +5.4%, and margins are expanding by 740bps vs. consensus -26bps. The company reports on 26/6/15 and we note the significant divergence between the strength in QMG product level observations and consensus estimates.



4. AGCO EPS Expectations ‘Far Too High’: Deutsche [Click here to view] Barron’s – April 6th, 2015 SA: AGCO (AGCO -0.6%) is downgraded to Sell from Hold with a $40 price target, cut from $48, at Deutsche Bank, which says the market is “far too optimistic” about the company’s earnings this year and that the company could miss its EPS guidance of $3 by as much as $0.60.

QMG Opinion Our data remains negative on US Producers of ag/forest machinery (US29.3) with falling volumes (-36% yoy) the key catalyst of the weak product group performance. Our sales forecasts remain below consensus forecasts for AGCO (-35% vs. -25% – article highlights that Parts segment sales alone could decline by as much as 10%) and with the stock trading at a premium to the 3 and 5 year EV/Sales and EV/EBITDA multiples, our data highlights that the market is “far too optimistic” and risk sits firmly to the downside.


5. Radical changes in media consumption are not slowing down [Click here to view] Yahoo Finance – April 14th, 2015 Cyberlink research finds that people are embracing a multitude of digital media devices and changing their video, music, and general content consumption habits at a much faster pace than they have in the past.

QMG Opinion Our data highlights that product volumes remain strong (+6.6% yoy) for UK manufacturers of electronic products and top line performance remains among the best in the UK. Product data is very positive for listed equity in this space such as Pace (PIC LN)– consensus forecasts remain low, with QMG February data highlighting sales growth of +8.2% vs. consensus +4.5%. Trading on 11X and flat performance YTD – the data highlights risk to the upside.


6. Insider with Kubota  [Click here to view] Farm Industry News – April 14th, 2015

  • Kubota hit hard by 2008 recessionwith sales declining 20% or more during the period
  • New Vice President, Todd Stucke thinks outlook is positive with January sales +52%

QMG Opinion We remain positive on Kubota  – added to our Japan Focus List on 1/8/14 (+49.6%). Sales growth for Japanese producers of machinery for mining/construction remains strong at +9.5%, driven by +3.2% price and +6.3% volume growth, while the current level of pricing is impressive in the sense that it is well above the trailing three year average level (+1.8%). In addition, costs across this product group are currently -1.5% which is enabling +467bps of margin expansion. With approximately 65% of its production is based in Japan, Kubota is a strong play on Asian agricultural mechanisation. The company reports Q4/FY 15 results on 15/5/15 – consensus sales and margins appear being too conservative compared to QMG data observations.



7. Tokyo Electron Ltd shares fall on TSMC cuts capex plan SOURCE – April 17th, 2015 Shares in Tokyo Electron fell the most in three weeks after its biggest customer, Taiwan Semiconductor Manufacturing Co. lopped $1 billion off its capital spending plan.TSMC said Thursday after the Tokyo market closed that it was cutting planned spending amid weak orders for custom-made semiconductors used in smartphones. The capex cut follows Intel Corp.’s Wednesday reduction of its outlook for spending this year. Tokyo Electron is currently being acquired by Applied Materials Inc., which is also a supplier to TSMC. Applied Materials dropped 3 percent. Tokyo Electron gets about 15 percent of sales from TSMC and Applied Materials gets about 14 percent from the Taiwanese chipmaker, according to data compiled by Bloomberg.

QMG Opinion Our data continues to reflect very positively on this product group.




8. Apogee Posts Stronger-Than-Expected Results [Click here to view] Wall Street Journal – April 8th, 2015 Apogee Enterprises Inc. on Wednesday reported a bigger-than-expected increase in earnings for its fiscal fourth quarter, driven by double-digit sales growth in three of its four segments.

QMG Opinion QMG data is supportive of this result, with US glass producers one of our most preferred product groups. We highlighted Glass producers (US26.1) as our second highest ranked product group in the US market on 27/02/15 (Link – USA monthly report). Volume remains the key driver (+11% yoy), and with margins continuing to expand – outlook remains positive for APOG – warrants further investigation.  


9. Praxair Surface Technologies Receives Nadcap Accreditation for Coatings… [Click here to view] Wall Street Journal – April 8th, 2015 Praxair, Inc. (NYSE:PX), today announced that its Praxair Surface Technologies coating service center in Changzhou, China, recently received Nadcap (National Aerospace and Defense Contractors Accreditation Program) accreditation for coatings.

QMG Opinion PX sits within the manufacturers of industrial gases (US24.11) product group, with sales growth of +12.4% yoy level, driven by +1.7% pricing and +10.7% volume growth. Margin expansion is the area where QMG data reflects exceptionally positively on this product group. The company reports on 29/4/15 and consensus sales and margin estimates are well below the levels implied by our data.

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