Morningstar | Jungheinrich's Initial Orders for 2019 Show Growth Holding Up; Shares Attractive
2018 was another year of exceptionally high revenue growth, at 11%, for narrow-moat Jungheinrich, supported by strong global demand for forklift trucks and in line with our expectations. However, we expect to slightly reduce our EBIT forecast for 2019 due to a lower result for 2018, 20 basis points below our forecast, and cautious management guidance. This should not have a material effect on our EUR 36 fair value estimate, and we see the shares as attractively priced.Top-line growth guidance doesn't look like a stretch. The midpoint calls for 4%. We are above that at 5% and plan to stick with that number for the time being. Initial figures on 2019 show demand holding up with last year's rapid growth. In the first two months, order growth in value terms was up 14% year over year for the company. We still expect a significant step down in growth this year, reflected in our mid-single-digit revenue growth forecast, due to tough year-over-year comparables and a softened economic backdrop. However, these initial figures provide a nice cushion to that drop in growth when it eventually materialises. Even with a softened economic environment, we think demand for forklifts can moderately exceed GDP growth. E-commerce and e-procurement growth is increasing demand for electric warehouse forklifts, a key product category for the company. This category has proved more resilient to the cycle since the beginning of the warehouse boom in 2007.
While we are happy to sit at the high end of management's revenue targets, our expectations for margin improvement are well above the high end. We had been modelling a 30-basis-point improvement due to less margin pressure from raw materials prices. However, the company's range is negative 20 to positive 20 basis points. Given that Jungheinrich does not have any aggressive programs for margin improvement or underutilised production capacity, we would not anticipate a positive surprise on margins.
Jungheinrich is engaged in the development of new trucks and logistics solutions. Co.'s operating activities are divided into two segments: Intralogistics, which is engaged in the development, production and sale of new trucks including logistics systems as well as the mail-order business, short-term hire which include the rental of new and used material handling equipment, reconditioning and sale of used equipment and the provision of after-sales services including the maintenance, repair and spare parts businesses; and Financial Services, which encompasses the usage transfer and sales financing of material handling equipment and warehousing technology products.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.