jiazi cui ying jiang presented: april 24, 2014. agenda company overview relevant macroeconomic...
TRANSCRIPT
SIMPSON MANUFACTURING CO., INC (SSD)Jiazi Cui
Ying Jiang
Presented: April 24, 2014
Agenda
Company Overview Relevant Macroeconomic Trends Industry Structure Analysis Financial Analysis Projections/Assumptions Valuation Recommendation
Company Overview Info: Incorporated in Delaware in 1956 2,295 employees Market Cap : 1.63 billion Business: Through Simpson Strong-Tie
Company Inc. Leading manufacturer of wood
construction products and concrete construction products.
Markets: residential construction, light industrial
and commercial construction, DIY. Channel: Dealer, builder, home centers, and
internet. Goal: Help people build safer and stronger
homes and buildings. Acquisition & expansion Testing labs.
Source: SSD 10-K report & FOURTH QUARTER AND FULL YEAR 2013 report
By Products
By Segments
Sales Distribution
Products
Source: SSD website.
Simpson Strong-Tie Locations
Management Information
Name Position Age Start from
Karen W Colonias President/CEO 56 1984
Brian Magstadt CFO 46 2004
Jeffrey Eric Mackenzie Vice President 52 2000
Source: Bloomberg
Source: Forecasting the numbers of people affected annually by natural disasters up to 2015 By Shamanthy Ganeshan, Oxfam GB, Research Intern (Economist)
& Wayne Diamond, Oxfam GB, Global Research Methods Adviser , EM-DAT
Industry Overview
Building Construction
Construction Product demand picks up
Profit improves with the demands
Industry Performance
Industry revenue is expected to keep increase due to an uptick in residential and commercial construction activity.
Source: Bloomberg
Industry Overview
Increase in investor confidence will boost demand for this industry's services. In 2014, global investor confidence is expected to increase.
Measures private spending on home improvements, upgrades and repairs
• 2012 increase 2.9%• 2013 increase 4.3%• 2014 increase 5.1%
Source: Bloomberg
Industry Overview
Global Steel Price IndexGlobal Steel Price declined Recovery since 2015
Source: Bloomberg
Industry Overview
Porter’s Five forces Rivalry Co
mpetition
MED-High
• Competition ranges from subsidiaries of large national or international firms to small regional manufactures.
Supplier
’s bargaining power
MED
• Mainly dependent on Steel.• Purchase raw materials from a variety of commercial sources.
Buyer’s
bargaining
power
MED
• Buyers have several choices.• Provide products to diversified customers.
Substitutes
LOW
• Required by the building.• Supported by building code.• Increasing amount of natural disaster.
Threat of
new entrants
LOW
• Needs significant R&D input.• Needs large quantity, high capital requirement.• Regulations.
• Wide Geographic Presence• Extensive Distribution Channels• Broad Range of Offerings• World’s largest lab test
Strengths
• High Inventory• Dependence on a few customersWeaknesses
• Green and Sustainable Construction Market• Growth in Building Construction Industry• Production Innovation
Opportunities
• Stringent Regulations• Intensive CompetitionsThreats
SWOT
Source: Yahoo Finance
Stock Performance
Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg
• Revenue Growth Rate keep growing• FY 2012 R&D expense increase rapidly
Financial Analysis
Financial Analysis
Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg
Financial Analysis
Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg
Financial Analysis
Comparable Companies
Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg
Comparable Companies
Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg
Revenue Forecast
Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg
Cost of Capital
Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg
Valuation-DCF
Valuation-DCF
Valuation-DCF
Implied Share Price
Current Stock Price: $33.84
26
Recommendation
Watch List