WEIR GROUP PLC

WEIR GROUP PLC

Overview: What does it do?

Deutsche Bank: Conclusion

Engineering

Solutions

Recent info: 04/08/14

-DB M&A could help Weir expand into China by either:

(1) helping to acquire a local company (2) helping to carry out a joint venture

- DB Corporate Broking could fill the void created by the departure of BofA brokers (fired due to undisclosed conflict of interest )

- DB ECM could help Weir obtain investment to mute the lack of confidence in their shares, thus boosting their recovery

- DB Sectors would be able to provide expert advice on uncertainty in fracking industry

- DB M&A could help Weir enlarge their flow control portfolio by acquiring relatively 'smaller' comapnies cuh as NOV, Kemper, Forum.

WEIR

GROUP

PLC

Engineering

Services

Engineering

Equipment

In conclusion Weir would be a good client for DB

Overview: Customers & Markets

Customers

Oil & Gas

Minerals

Markets

Power & Industrial

Deutsche Bank: Requirements of Weir Group plc

POWER AND INDUSTRIAL

Strategy: Brokers' 5-10 Year Forecast

OIL AND GAS

1. Develop international shale markets

2. June Capital markets day

-less well attended

-no meaningful new information, over emphasise positives

3. Investec analysts forecast a slow recovery

4. Palliate lack of investor confidence (Source: Investec)

5. Challenges in Minerals

6. Advice on short term outlook for fracking market

7. Becoming No. 1 provider in flow control (FMC current leader)

MINERALS

1. Short term: sentiment rather than valuation will be key driver of share price

2. Oil & Gas division has long term revenue growth, with a rate greater than global GDP growth)

3. Minerals, although performing well recently may have risk of delayed OE deliveries

Strategy: Weir's 5-10 Year Aims

Global Leaders

1. Target and establish sustainable, organic growth in existing markets

2. Develop new growth in emerging markets

3. Carry out the above with its existing business model & strategy:

Lagging behind immediate competitors for wellheads, valves and frack trees.

We know Weir have identified this by their recent attempt (failed) to merge with Finnish Metso, who specialise in mining (54%) and construction (20%).

Four pillars that drive growth:

1. value chain excellence

2. innovation

3. collaboration

4. global capacity

Strategy: Challenges

Weir's Oil & Gas account for 40% of the group, of which 75% of sales are in N. America

1. High exposure to oil, gas and minerals sectors which can be volatile

2. Geographic spread increases exposure to translational exchange rates

3. Operations in countries with high political risk

Valuation: Research Analysts

Overweight: 33%, Hold: 50%, Underweight: 17%

Overview: Impacting Macro-forces

Points 1-4, would all result in an increase in oil prices. Should any occur now, it would be positive for Weir.

Overview: Corporate Governance

Keith Cochrane, CEO

Jon Stanton, Finance Director

Lord Robertson of Port Ellen, NED

1. Global economy: vehicle fuel, domestic appliance systems

e.g. increase in population has led to increase in petrol cars

2. Financial Markets: trading commodities

e.g. Global Financial Collapse

3. Natural/human catastrophes: massive oil leaks, hurricanes, terrorist acts, tsunamis/earthquakes

e.g. 9-11 attacks, Hurricane Katrina aftermath

4. Wars/conflicts in oil-associated nations

e.g. Iran-Iraq war

5. Research: Science, Green Technology, political incentives

e.g. electric cars, tax discounts in imported, hybrid cars

Please open the link

http://prezi.com/d-93031fp-hr/research-analyst-valuation/#

Charles Berry, Chairman

John Mogford, NED

Examples are historical, key events pertaining to oil prices in the past

Board of Directors

Richard Menell, NED

Lord Smith of Kelvin,

Former Chairman

[ 5 is an example of a factor that would impact Weir negatively]

(Departed)

Alan Ferguson, NED

Melanie Gee, NED

Mary Jo Jacobi, NED