presented by nan liang tianbai wang qi he may 1, 2012
TRANSCRIPT
Presented byNan LiangTianbai WangQi HeMay 1, 2012
Agenda Intro Related Stock Market Macro Review Business Review Comps Financial Analysis DCF
Intro Business Description
Gentex Corporation designs, develops, manufactures and markets proprietary electro-optic products, including automatic-dimming rearview mirrors for the automotive industry and fire protection products mainly for the commercial building industry.
Sector: Consumer Goods Industry: Auto Parts & Equipment GICS Map: 251010 Revenue in 2011: 1.02Billion
Resource: GNTX 10-K
Products
Resource: GNTX Official Website
Global Business Distribution
Resource: GNTX Official Website
Financial Description52 Week Range: $20.69 - $32.21PEG: 0.95Trailing P/E: 18.78Forward P/E: 15.26Implied 1 Year Growth Rate: 23%5-7 Growth Rate: 5.14%Market Cap: 3.15 BBeta: 1.51
Intro
Resource: Yahoo Finance
Related Stock Market
Resource: Yahoo Finance
Industry
Global Automobile Manufacturing & Auto Parts Manufacturing
Global Auto Vehicle Sales
Global Auto Parts Manufacturing
Resource: IBIS World
Business Locations
Resource: IBIS World
Automakers
Resource: IBIS World
Industry Opportunity
Opportunity 1 – Better Economy
When households are optimistic about their financial future and the economy, they are more likely to spend money on big-ticket items. Purchasing a new vehicle requires a significant outlay, which is often financed through loans. In times of economic downturns, households are less willing to spend money on expensive items, for fear of losing their jobs and being unable to meet repayments. Consumer sentiment has been fairly low around the globe in 2009 due to the global financial crisis.
Resource: IBIS World
Opportunity 2 – Demand Growth
Opportunity 3- Government Incentives During Recession
Opportunity 4 – Regulation & Innovation
Market Risks
ESTIMATED AUTOMATIC-DIMMING MIRROR ESTIMATED AUTOMATIC-DIMMING MIRROR GLOBAL MARKET SHAREGLOBAL MARKET SHARE
Resource: GNTX Presentation
Auto-Dimming Rearview Mirrors Market
Resource: GNTX 10-K
FireProtectionProducts
Auto-DimmingRearview Mirrors
DimmableAircraft
Windows
Product Lines
98%Of Total Sales
Found In 1974Manufacturer Of These
i.e. Boeing 787
Source: Gentex’s Website
Auto-dimming Mirrors
Source: Investor Presentation
Glare
Smart Beams ®
Source: Investor Presentation
Rear Camera Display (RCD) Mirror
Source: Investor Presentation
Revenue GrowthSource: Annual Reports
Main ClientsSource: Annual Reports
Region
Source: Annual Reports
Global Market Share (2011)
Source: Annual Reports
Main CompetitorMagna Mirrors
Competitor: Magna Mirrors+ Owned by Magna International, Inc. (NYSE: MGA)+ MGA also produces lots of auto parts for cars: Body, Seating, Roof, and hybrid energy system, etc.
It’s Gentex’s Main Competitor.But Comparable or Not?
Multiples
Source: Bloomberg & Yahoo!Finance
GNTX MGA DLPH LEA BWAMkt. Cap 3.21B 10.21B 10.16B 4.22B 9.17B EPS 1.17 4.20 3.61 5.08 4.73 P/E 19.12 10.44 8.57 8.27 16.90 EV/EBITDA 9.77 4.54 4.89 3.13 8.97
Target Price: $7 - $20
Gentex Current Price: $22
Capital Structure 0 Debt
Quick Ratio
Data Source : 10-K
2007 2008 2009 2010 2011Cash Ratio 4.65 5.95 5.73 4.83 3.56 Current Ratio 7.73 9.24 8.62 9.09 7.47
2.50
3.50
4.50
5.50
6.50
7.50
8.50
9.50
10.50
Quick Ratio
Financial Analysis
FY 2011 FY 2010 FY 2009 FY 2008 FY 2007
Tax Burden 67.4% 67.7% 67.1% 67.3% 67.9%
Operating Margin 22.6% 23.4% 17.4% 17.4% 21.7%
Asset Turnover 0.94 0.89 0.69 0.75 0.78
Leverage Ratio 1.13 1.12 1.11 1.10 1.12
ROA 21.2% 20.9% 11.9% 13.1% 16.8%
5 Year Average Adj ROE 14.0% 13.4% 12.8% 14.0% 15.2%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
DuPont Analysis
Data Source : 10-K
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016TERMINA
L YEAR
Profit Margin 18.68% 9.95% 11.87% 16.87% 16.08% 15.66% 15.61% 14.76% 14.87% 14.67% 13.65%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
Profit Margin
Data Source : 10-K
Current Price: $22.05
DCF: $27.2 - $35.5
Multiple: $7- $20
Buy 200 shares at market price,
about 1.5% of the portfolio
Recommendation