DUEG - Duerr AG

[Phaceliacapital]

I was a bit confused as to whether I should post this in the General Discussion or Investment ideas section, I made a small remark about it in the car manufacturers post but that will presumably be buried under PlanMaestro's continuous updates :D

 

So I thought I open the topic here and if it's inappropriate please move it to the general discussion section or something?

 

Now, on Durr:

 

Description:

 

"Duerr AG engineers and builds plants and manufactures machinery for the automotive industry in Europe, North and South America, and Asia. Duerr designs and constructs fully automatic paint finishing plants, final assembly systems, and air purifier. Duerr also offers balancing and diagnostic systems and produces cleaning filtration and automation equipment."

 

Some figures:

 

• Global market share of 50%, around 60% of paint shops and 50% of assembly plants have its technology
  
• Strong exposure to emerging markets: 55% (but down from 65%)
  
• 4 divisions: Paint and Assembly Systems (46% sales), Application Technology (21%), Measuring and process systems (29%) and Clean Technology Systems (4%)
  
• EBIT margin of 7%
  
• At first sight it looks like an industry with significant entry barriers and highly concentrated players (around 60% controlled by 3- 4 largest players) and Durr itself is twice as large as the next competitor. Capex for new entrants would be way too high
  
• Durr has a reputation of quality assurance and is really innovative in terms of reducing the energy used/paint etc used in the production process (which leads to significant savings for car manufacturers)
  
• They have a policy of using current raw material prices when calculating project budgets + time between bid and order intake is quite slow
  
• I went through their AR 2011 and it is one of the most complete AR that I have been through, there is lots and lots of information and I think they also received the rewards for most transparent report (to check)
  
• Of course, as a consequence of the above, the stock price has run up terribly, haven't run the financials net
  

 

Anyone who has experience with this company? Or other information?

 

They have been crushing expectations by expectations and have been duly rewarded, the question of course is whether the market has over/underrewarded?

 

You would think that they are very cyclical, (just like an ASML for the semi conductor industry) but they seem to counter this by a great exposure to the emerging markets. Their backlog for 2013 is already known and it appears that this will also be a good year for them, the main concern I have is whether these backlogs will stay at these high levels?

 

Thanks in advance!

[Phaceliacapital]

Took a look at it today and yesterday, of course too expensive but an interesting business to buy when pulled down by the entire sector.

 

I did not expect I would finish reading a paragraph concerning car spraying by murmuring the words "that's pretty cool"

 

Not providing more info but should one have the urge to discuss let me know (both on/offline).