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Case New Holland
Transcript of Case New Holland
“Innovation and technological progress are the key levers that have enabled CNH Industrial's brands, over the years, to maintain a significant competitive advantage and a global position of leadership.
CNH Industrial is committed to fighting climate change, through the development of innovative products with optimized efficiency and reduced emissions of pollutants and CO2.”
1842: Jerome Increase Case establishes Racine Threshing Machine Works in Racine, Wisconsin (USA).
1869: The company produces the first steam engine tractor.
1886: Case becomes the largest worldwide manufacturer of steam engines.
1902: McCormick, Deering Harvester Company, Plano Manufacturing Company, Champion Line and Milwaukee Harvester Company join forces to create International Harvester (IH) that in 1905 launches the first friction drive tractor powered by its proprietary stationary gas engine.
How do you trap a polar bear?
Seasonal demand for equipment
Peak retail March – June in Hemisphere and Sept.-Dec. in S. Hemisphere
Customer preferences vary by region/continent
N. America and Australia have increased demand for larger machinery
Farm size growth
Demand for renewable fuels
Cash Conversion Cycle
Compared to Industry
Increased EPA Regulations
Low ability to pay interest
Good, known Name
Decent profit Margins
Best tech. in industry
Strong overseas presence
Growing need for bigger, better equipment
Market growth in China and South America
1963: The Case network numbers 125 distributorships with subsidiaries in the United Kingdom, France, South Africa, Brazil and Australia.
1985: Case and IH merge to create Case IH.
1995: Case IH launches the state-of-the-art Advanced Farming System (AFS) which enables farmers to monitor yields using satellite technology.
2006: Case IH launches the Module Express 625, the first commercial cotton picker with the ability to build modules while harvesting, saving time, labor and capital.
2012: Fiat Industrial S.p.A. and CNH Global N.V. merge to make CNH Industrial
2013: CNH Industrial becomes operational in September
Global Market Revenue
CNH today: 11.40
Stock value- P0=13.28
Stock Price Evaluation
Buy the stock
The stock is undervalued at $11.40
It has a positive NPV
Possibility for growth due to the merger
Could be risky due to poor asset and management
CNHI a bit less liquid than industry based on lower current and quick ratios.
CNHI has much more debt that the industry based on the higher debt ratio. CNHI's lower TIE which suggests lower ability to cover interest expense.
CNHI's ITO is lower than the industry and a much higher DSO. Which suggests an overall weaker asset management for the company.
CNHI's TAT is only 35% of the industry suggesting weaker asset management. FAT is overall a little weaker than the industry as well.
CNHI is not as profitable in comparison to the industry. The 5 year avg. ROA for the industry is almost 4 times higher than for CNHI
CNHI's ROE is much weaker than the industry
Both the TAT is lower while the Equity Multiplier is higher than the industry suggesting weaker asset management and higher debt for CNHI
CNHI has a much lower working capital, 2.5 times worse than the industry. This is due to a much higher DSO than the industry.
You make a hole in the ice, and line it with peas.
When the bear goes to take a pea,
you kick him in the ice hole.