The Siemens spin-off has taken place, and the Energy side of the company is particularly interesting for the future, so there should be its own thread where we can focus the discussion around the company.
Siemens Energy’s business area that spun off includes gas and steam turbine offerings, generators, transformers, and compressors, as well as wind turbines through Siemens Gamesa Renewable Energy SA, in which it owns 67%.
Categories snipped from the pages:
This Energy will be a direct competitor to, for example, General Electric and Mitsubishi Heavy Industries. I personally root for Siemens, as I work in the industry myself and Siemens has been very convincing so far.
Siemens AG has initially spun off 55% of Siemens Energy to shareholders but plans to reduce its remaining direct stake of 35.1% significantly within 12-18 months of the listing. The Siemens pension fund owns 9.9% in Siemens Energy.
Siemens will keep a stake of around 25% in Siemens Energy, a person familiar with the matter said, giving it the power to block unwanted takeover attempts. It could keep that blocking minority for at least five years, the source said.
I somehow wasn’t even aware that Siemens is involved in the energy business, although it shouldn’t be a surprise for such a giant. The old joke about a Siemens-Neste merger isn’t such a bad joke anymore
Then, as a background, why is Siemens Energy better than the aforementioned companies? Are the products better, is the service/expertise of higher quality, is the efficiency/productivity of the equipment better, or is the company’s profitability better (cash flow, profit, gearing)?
I haven’t had a chance to compare Funapuolta (Funapuolta) from Energy’s perspective to competitors, and I haven’t invested in Siemens before. Mainly, I’ve noticed that in Europe, Siemens’ quality, workmanship, and dedication to matters have been appreciated for a long time. The slight downside, of course, is the price associated with quality - you can get various components and so on much more affordably from Serbia, the Czech Republic, China, etc.
I still know that, for example, a few significant companies in the industry in Finland trust Siemens’ quality, and their equipment is acquired when there’s no scrimping and when they know they want “the best.” Unfortunately, I can’t elaborate on these matters in great detail.
This is indeed an interesting target. Strong in Europe and could be a big winner in future green energy investments. Furthermore, these spin-offs tend to have additional upside potential during the first 12 months.
Update: It now seems to be visible in Nordnet as well.
Some article referred to these valuations:
–VALUATION: Berenberg estimates the enterprise value of the German energy company at around 19 billion euros ($22.15 billion), while Reuters reports consensus estimating the value at between EUR21 billion and EUR22 billion, according to a source close to the company–which would correspond to a share price of EUR28.90 to EUR30.28.
Where did those valuations come from?
On the other hand, I read that last year, the whole entity made an EBITDA of €1.3 billion, which would result in an EV/EBITDA of approx. 23 with the valuation above. If I understood their spin-off materials correctly, last year Net income was €282 million, so with that valuation, the P/E would be over 100? (and this year, a significant loss has been made). Either there is something wrong with those figures, or those valuations are completely off.
At least at a quick glance, this doesn’t look like a buy case.
I’ve been trying to gauge the same, which is why I, for one, will first let the market price in the starting levels. At least it gives you a level for a stop-loss, if nothing else. Otherwise, this is just pure lottery.
In a way, they do match the valuations of other renewable energy/hydrogen tech companies. Not that there’s any visible sense in them, in my opinion, but as long as the momentum is on their side… I’m not jumping in at these levels, but it’s interesting to follow.
As is typical for spin-offs, the stock price initially dipped sharply as people shunned the new stock. The difference between the lowest and highest price was almost 20%. It’s a shame I should have been active 20 minutes from the start, but the stock wasn’t visible on Nordnet.
Siemens and its pension fund are selling a total of approximately 20% within a year, so the company’s presumed undervaluation may not dissipate immediately.
I don’t know about others, but I dared not to leave - with pennies, of course, to begin with. In my experience, this is also a sure way to bring the share price down towards more attractive refueling prices
The valuation may be tight based on current key figures, but the reputation, the breadth of the product portfolio (considering the Gamesa (Gamesa) ownership), and the conservativeness of the strategy (the company does not despise transitional solutions) influenced my decision. I have not yet figured out when the hydrogen economy will finally break through and at what point in the hydrogen value chain the best profits will be made. I believe this is not the riskiest stock in this disruption, but it still offers upside in the longer term.
Siemens Energy’s first earnings release as an independent company is still undiscussed here. I found the numbers mildly promising.
The write-offs in Gas & Power, of course, dragged the 2020 result to a hefty loss. One can only hope that this is a one-time sting, removing outdated extensions from the portfolio. The future largely depends on whether there will be significantly more of these. The backlog appears to be in order.
I only briefly familiarized myself with this company when I bought the initial position. It’s quite a grim read, but I should, of course, better understand the company’s internal dynamics. There are large provisions for next year due to Covid, but perhaps the vaccination aspect hasn’t been taken into account (which is understandable). The stock price doesn’t seem to be taking a hit, so perhaps the figures were in line with forecasts. Have there been any analyst assessments of this company yet? I haven’t seen any.
It looks like Mandatum’s portfolio states that nine analysts follow it. Eight buy and one hold. The highest is 29 euros and the lowest is 25. The average is 27.22 euros (12 months), a strong buy.
I’m not jumping in at these levels, but it’s interesting to follow.