Author Topic: LNR.TO - Linamar Corporation  (Read 15183 times)

kab60

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Re: LNR.TO - Linamar Corporation
« Reply #20 on: January 25, 2019, 07:40:29 AM »
CEO has bought shares recently and now they announced a decent sized buyback. I'm happy they take advantage of the low share price and didn't wait till leverage was down to 1xdebt/ebitda. I've made it a very large position and buybacks (or lack off) was an annoyance so glad they act.

"We are initiating this NCIB in recognition of what we believe is a
significant level of under valuation of Linamar stock. We do not feel that the
value of our business is being adequately reflected in our current share
price" said Linamar CEO Linda Hasenfratz.

Under the Bid, the Company may repurchase on the open market (or as otherwise
permitted), at its discretion during the period commencing on January 29, 2019
and ending on the earlier of January 28, 2020 and the completion of purchases
under the Bid, up to 4,506,324 common shares of the Corporation (the "Common
Shares"), representing approximately 10% of the "public float" of the Common
Shares (within the meaning of the rules of the TSX), subject to the normal
terms and limitations of such a bid."


RadMan24

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Re: LNR.TO - Linamar Corporation
« Reply #21 on: January 25, 2019, 09:40:12 PM »
Interesting. I was wondering if and when that was going to happen. Thanks for sharing.

compounding

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Re: LNR.TO - Linamar Corporation
« Reply #22 on: January 28, 2019, 10:58:19 AM »
Is there a way to track share repurchases on the Toronto Stock Exchange or do we have to wait for the quarterly report for updates?
@JohanHjortsson

Spos

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Re: LNR.TO - Linamar Corporation
« Reply #23 on: January 28, 2019, 11:29:31 AM »
Is there a way to track share repurchases on the Toronto Stock Exchange or do we have to wait for the quarterly report for updates?

You can track share repurchase activity on sedi.ca.  I am not sure of the exact reporting requirements, but companies either report shortly after transactions are made or monthly.

longlake95

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Re: LNR.TO - Linamar Corporation
« Reply #24 on: January 28, 2019, 11:47:19 AM »

compounding

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Re: LNR.TO - Linamar Corporation
« Reply #25 on: February 11, 2019, 05:41:51 AM »
@JohanHjortsson

jfan

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Re: LNR.TO - Linamar Corporation
« Reply #26 on: May 03, 2019, 11:28:33 PM »
 Am I being to optimistic here or is the Market right?

Q1 2019 is out. Linda is guiding that they will have $500 to 700 million in free cash flow this year. Giving a current free cash flow yield of >15%.

There are some headwinds like tariffs/USMA (likely temporary), peak auto (in the setting of US fleet age of ~12 years), Worldwide Harmonized Light Vehicles Test Procedure in Europe affecting OEMs last year and this year, and the existential disruption by autonomous vehicles and electric vehicles (which obviously will come to fruition within the next 5 years).

Linamar has multiple growth options:
1) Continued Skyjack market share gains
2) MacDon acquisition with a potential of a 4x sales increase if they can gain International market share similar to North America.
3) Continued Content per vehicle growth as OEMs outsource manufacturing
4) Enough FCF to opportunistically paid down debt vs buyback shares (according to Linda on the conference call, depending on return)
5) Market multiple expansion given that the Industrial operating earnings makes up 40% of consolidated operating amount (despite it being viewed as only an auto supplier)

It seems like a reasonable bet on the upside particularly given the astute management involved.





« Last Edit: May 03, 2019, 11:30:04 PM by jfan »

kab60

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Re: LNR.TO - Linamar Corporation
« Reply #27 on: May 04, 2019, 02:55:14 AM »
Well, I'm in the same boat and have made it a 20 pct position. Not much to add really. Year end it should trade very meaningfully below book value, and so hopefully they get more aggressive on buybacks when leverage is down to 1x.

SnarkyPuppy

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Re: LNR.TO - Linamar Corporation
« Reply #28 on: May 05, 2019, 08:02:55 AM »
Just diving into this- looks interesting.  Quick question for those closer to the details- why have changes in working capital eaten away at such a large proportion of CFFO over the last 2 years?  They are guiding for $500-700mm FCF but why is this year not the outlier?

SnarkyPuppy

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Re: LNR.TO - Linamar Corporation
« Reply #29 on: May 05, 2019, 09:18:07 AM »
Some other things I don't love:
- They seem to boast a lot about double digit earnings/sales but a lot of this seemingly comes from acquisitions over the last few years?
- Management gets paid a ridiculous amount.  CEO and dad each get $11mm each bonus in 2018?
- FCF meaningfully below Net Income...growth has required meaningful increases in working capital (they also moved LT accounts receivable into changes in WC in 2017 - something to be mindful of).   Unclear how this normalizes.  Trades at closer to 10-11x levered FCF if you consider ~200mm increase in WC to be normal going forward *just a quick assumption).   
- As a result (FCF being constantly substantially below NI), return on tangible capital in 2017 and 2018 have been 7% and 4% respectively (as opposed to 14% and 16% using earnings).  And this is at the higher end of the cycle.   With that said 2015 and 2016 return on tangible capital using FCF were double digits.   
- This trades at 1.6x tangible book which is more representative of what you're paying (I think disingenuous to count goodwill/intangibles)

There are certainly some things I like but would be curious to get some feedback on the above to see if I'm looking at it wrong (have only done a couple hours of work so far).

Also - can someone shed some light on the specifics of what "new business" represents.  Management stating $8.5-9bn of annual revenue through 2023... is this contractual? verbal commitments?   Can customers cancel?
« Last Edit: May 05, 2019, 10:11:02 AM by SnarkyPuppy »