Following Alstom's earnings release yesterday, which came in 'in line with preliminary results', Oddo BHF takes a positive view of the diagnosis provided by the new CEO and the initial corrective measures announced.
The broker believes the group has demonstrated a 'genuine effort toward transparency' regarding operational challenges and considers the discourse from the new leader, who took office six weeks ago, to be 'fair and reassuring'.
According to the research note, the first pragmatic steps implemented, notably the prioritization of critical projects and the acceleration of procurement savings, could yield rapid results. Oddo BHF also points to management's argument that the gross margin gap between the order book and the income statement 'is not structural'.
The research firm acknowledges that a period of uncertainty remains following April's profit warning, but considers the stock to be trading at a discount of more than 20% relative to its five-year historical average.
Alstom is one of the world leading manufacturers of infrastructures for rail transport sector. Net sales break down by family of products and services as follows:
- rolling stocks (43.1%): trains, tramways and locomotives;
- railway services (38.4%): maintenance, modernization, management of spare parts, support and technical assistance services;
- signaling, information and control systems (9.4%);
- railway infrastructures (9.1%): infrastructures for the track laying, lines electrical power systems, electromechanical equipment, telecommunication devices and traveler information in station, terminals for automatic purchase of tickets, access to escalators, lifts for disabled, automatic landing doors on platforms, ventilation, air conditioning and lighting systems).
Net sales are distributed geographically as follows: France (14.3%), Europe (45.1%), Americas (16.3%), Asia/Pacific (11.7%), and Middle East/ Africa/ Central Asia (12.6%).
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