TRATF - Traton is a buy at Deutsche Bank due to MAN upside

Deutsche Bank defended the upside for Traton SE ( OTCPK:TRATF ) on Tuesday even after the company flagged a weak quarter for MAN due to missing wiring harnesses from Ukraine.

Analyst Nicolai Kempf noted that estimates for the brand had already noticeably come down over the last months, but thinks the actual results were significantly better than expected as the brand reached an almost break-even level and MAN was the key driver for the earnings beat.

"Indeed, while the production stop in the second quarter were similar to the shutdowns in Q2-20 the earnings improved by almost €300m. As Scania continues to face headwinds from supply chain disruptions VWTB achieved a double-digit margin - the highest among TRATON's brands thanks to supportive price and mix effects. The management does not see a weakening of demand but amid the high order backlog is cautious in taking in new orders. In fact, the current backlog is sufficient to cover the next 12 months."

The upside for the MAN business is called immense and the restructuring progress is seen as very encouraging.

Deutsche Bank kept a Buy rating on Traton ( OTCPK:TRATF ).

Earlier in the day, the final steps in the charging infrastructure between Traton Group, Daimler Truck and Volvo Group was announced. The new JV is expected to have a significant role in supporting the European Union’s Green Deal for carbon-neutral freight transportation by 2050.

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