DTGHF - Daimler Truck: Driving Towards A Sustainable Future
2024-01-29 23:36:03 ET
Summary
- Daimler Truck is a leading manufacturer of commercial vehicles with a strong global presence and deep expertise.
- The business is responding well to the BEV/autonomous vehicle transition, positioning the business well for the future, with scope for market share growth.
- The Fuso/Hino merger should enhance the company's position in Asia, supporting near-term growth and an improvement in economics.
- The wider industry is forecast to grow well, driven by Asia and LatAm (Brazil and India in particular), countries within which Daimler has good exposure.
- Daimler performs okay relative to its peers but is significantly cheaper, with an NTM FCF yield of ~12%.
Investment thesis
Our current investment thesis is:
- Daimler is a quality business with strong barriers to entry. The company has a high market share, deep expertise, and a global footprint.
- The industry is experiencing a transition toward ZEVs and autonomous vehicles, with progress looking positive. We expect Daimler to maintain its market position at a minimum, although Management is forecasting market share growth.
- Fuso's merger with Hino should support better growth and returns in Asia.
- Daimler is incredibly cheap relative to peers, with a FCF yield of ~12% and a >30% discount to its peers.