Latest news with #CitiResearch
Globe and Mail
2 days ago
- Automotive
- Globe and Mail
Tariffs turn Porsche's headwinds into a ‘violent storm'
This year was already shaping up to be a tough one for Porsche. Chinese customers were losing interest in the luxury sports car, its bet on electric vehicles was failing with drivers long enamored by the rumble of its combustion engines and its stock price hovered near record lows. Then President Donald Trump imposed a 25 per cent tariff on all cars imported to the United States starting in April. Last week, he doubled down on that, threatening a 50 per cent tariff for all products from the European Union, sending Porsche's shares tumbling further and EU leaders and auto executives scrambling to make a deal. All of Europe's leading carmakers have been hit by the tariff turbulence when they are already facing increasing competition from Chinese automakers. But unlike BMW, Mercedes-Benz and Volkswagen, Porsche manufactures its vehicles exclusively in Germany, leaving it more vulnerable to the combined threat of advancements from China's rivals and tariff increases in the United States. 'The Pope of GT cars': Andreas Preuninger keeps Porsche 911 GT3s in high demand 'It is literally a perfect storm,' said Harald Hendrikse, a managing director covering the European auto sector at Citi Research. 'You have a triple threat, which is China, an EV strategy that was wrong — despite being lauded at the time — and then Trump's tariffs, which nobody had guessed would be as severe as they are.' That has led Porsche to scale back its forecast for the year, by about 2-billion euros ($3.1-billion). Its profit margin range is also expected to drop, to 6.5 to 8.5 per cent, from 10 to 12 per cent. 'Our market in China has literally collapsed,' Porsche's chief executive officer, Oliver Blume, told shareholders at the company's annual conference May 21. 'U.S. import tariffs are weighing on our business.' 'We already faced massive headwinds last year — now we are experiencing a violent storm,' Blume said. Porsche's sales in China have been declining steadily, down to some 56,800 vehicles last year, from a peak of 95,600 in 2021, as Chinese customers turn to local brands with technology that has surpassed offerings from European auto manufacturers. Weaker demand in China and declining sales of its electric models have pushed Porsche's shares down to nearly half of their value from their debut on the Frankfurt Stock Exchange in 2022. Even before the U.S. tariffs were put in place, Blume had announced plans to lower overhead costs, moving to consolidate production at two factories, instead of four. The company has also begun eliminating 3,900 jobs over the coming years, largely through attrition and the expiration of short-term contracts. Demand for electric cars in Europe and the United States slumped after countries around the world, including Germany, slashed EV subsidies, prompting Porsche to scale back its goal of having 80 per cent electric vehicles in its lineup by 2030. Starting this year, the company is bringing back models with combustion engines and expanding its offering of plug-in hybrid vehicles. Porsche is also abandoning its planned investments in battery technology. Blume, along with his counterparts at BMW and Mercedes, has been involved in the talks with Brussels and Washington as part of Europe's overall efforts to reach a trade agreement. They have repeatedly stated that their goal is to see duties dropped on all vehicles crossing the Atlantic. The Confederation of European Business, a lobbying group in Brussels that represents firms across the bloc, said that EU leaders had reached out for data about companies' most recent investments in the United States, as part of preparations for trade meetings with officials in Washington. German companies invest three times as much in the United States as Americans do in Germany. But many have recently grown wary of doing so, citing the chaos caused by Trump's trade policies. During Trump's first term in office, the German car companies were able to fend off his threat of tariffs by stressing the importance of their contributions to the U.S. economy. BMW, Mercedes and Volkswagen employ about 48,000 people in their U.S. factories, and German automotive suppliers provide an additional 90,000 jobs. Despite Trump's desire to shift production to the United States, Porsche has indicated that it has no intention of moving, citing its relatively low number of vehicles produced annually. But Porsche is majority owned by the Volkswagen Group, which includes nine other brands such as Lamborghini, Audi and Volkswagen. Volkswagen has a factory in Chattanooga, Tennessee, and its Scout brand is also investing $2-billion to build a factory in South Carolina. Analysts have reported that Audi is exploring the idea of shifting production of some models to the United States as a result of the tariffs, although the company has declined to confirm the decision. That move could be part of any prospective deal that German automakers are hoping to reach with the Trump administration. Porsche shares many parts and platforms with Audi. If Audi opened a factory in the United States, that could pave the way for Porsche to follow, should the company eventually decide that production in North America made sense. For now, Porsche continues to see its future firmly linked to its reputation of being 'Made in Germany.' That label has taken a hit from the growing competition from Asian companies in recent years, but Germany and its leading products, including Porsche vehicles, still rank consistently among the world's best-known brands. 'There are a lot of examples of German brands that are household names,' said Cristobal Pohle Vazquez, an associate director at Brand Finance, a consulting company that studies name recognition worldwide. 'I think Porsche is a prime example.' That reputation, built up since the company's founding in 1931, and its loyal base of customers help give Porsche the pricing power to help ride out the storm, Hendrikse said. Like its parent company, Porsche has proved over time that it is able to make the changes necessary to take on new technologies and respond to crises. 'These companies have been around for 100 years for a reason — because they do adapt and they will adapt,' he said.
Zawya
3 days ago
- Business
- Zawya
ADNOC Drilling to take 70% stake for $112mln in rigs JV with SLB
ADNOC Drilling Co. will acquire a 70% stake for $112 million in a joint venture (JV) with SLB's land drilling rigs business in Kuwait and Oman. The JV comprises eight fully operational land rigs under contract with the respective national oil companies of both countries. The formation of the JV and the acquisition of a 70% stake, is expected in Q1 2026 once regulatory approvals are secured. ADNOC Drilling will fund the transaction through its existing debt capacity. The NYSE-listed SLB, formerly known as Schlumberger Limited, is a technology and services provider to the energy industry. Through this acquisition, ADNOC Drilling will gain immediate access to earnings, cashflow and returns through two operating land drilling rigs in Kuwait and six in Oman. "The headline valuation (3.5x EV/EBITDA) is accretive and we estimate could yield a 15% IRR i.e a 200 bps premium to the top end of the domestic framework," said Oliver G Connor, analyst at Citi Research, in a note. The deal is a first step in meeting the company's broader ambition to reach a 10% market share in the Oman/Kuwait market (i.e 30 rigs) with the flexibility to bring rigs back to the UAE in the long term, Connor added. ADNOC Drilling, which is listed on the ADX, expects to consolidate the newly acquired business in its financial reporting from 2026. (Writing by Brinda Darasha; editing by Seban Scaria)
New York Times
4 days ago
- Automotive
- New York Times
Tariffs Turn Porsche's Headwinds Into a ‘Violent Storm'
This year was already shaping up to be a tough one for Porsche. Chinese customers were losing interest in the luxury sports car, its bet on electric vehicles was failing with drivers long enamored by the rumble of its combustion engines and its stock price hovered near record lows. Then President Trump imposed a 25 percent tariff on all cars imported to the United States starting in April. Last week, he doubled down on that, threatening a 50 percent tariff for all products from the European Union, sending Porsche's shares tumbling further and E.U. leaders and auto executives scrambling to make a deal. All of Europe's leading carmakers have been hit by the tariff turbulence, at a time when they are already facing increasing competition from Chinese automakers. But unlike BMW, Mercedes-Benz and Volkswagen, Porsche manufactures its vehicles exclusively in Germany, leaving it more vulnerable to the combined threat of advancements from China's rivals and tariff increases in the United States. 'It is literally a perfect storm,' said Harald Hendrikse, a managing director covering the European auto sector at Citi Research. 'You have a triple threat, which is China, an E.V. strategy that was wrong — despite being lauded at the time — and then Trump's tariffs, which nobody had guessed would be as severe as they are.' That has led Porsche to scale back its forecast for the year, by about 2 billion euros, or $2.2 billion. Its profit margin range is also expected to drop between 6.5 percent and 8.5 percent, from 10 percent to 12 percent. 'Our market in China has literally collapsed,' Porsche's chief executive, Oliver Blume, told shareholders at the company's annual conference on May 21. 'U.S. import tariffs are weighing on our business.' 'We already faced massive headwinds last year — now we are experiencing a violent storm,' Mr. Blume said. Porsche's sales in China have been declining steadily, down to some 56,800 vehicles last year, from its peak of 95,600 in 2021, as Chinese customers turn to local brands with technology that has surpassed offerings from European auto manufacturers. Weaker demand in China and declining sales of its electric models have pushed Porsche's shares down to nearly half of their value from their debut on the Frankfurt Stock Exchange in 2022. Even before the U.S. tariffs were put in place, Mr. Blume had announced plans to lower overhead costs, moving to consolidate production at two factories, instead of four. The company has also begun eliminating 3,900 jobs over the coming years, largely through attrition and allowing short-term contracts to expire. Demand for electric cars in Europe and the United States slumped after countries across the globe, including Germany, slashed E.V. subsidies, prompting Porsche to scale back its goal of having 80 percent electric vehicles in its lineup by 2030. Starting this year, the company is bringing back models with combustion engines and expanding its offering of plug-in hybrid vehicles. Porsche is also abandoning its planned investments in battery technology. Mr. Blume, along with his counterparts at BMW and Mercedes, has been involved in the talks with Brussels and Washington as part of Europe's overall efforts to reach a trade agreement. They have repeatedly stated that their goal is to see duties dropped on all vehicles crossing the Atlantic. The Confederation of European Business, a lobbying group in Brussels that represents firms across the bloc, said that E.U. leaders had reached out for data about companies' most recent investments in the United States, as part of preparations for trade meetings with officials in Washington. German companies invest three times as much in the United States as Americans do in Germany. But many have recently grown wary of doing so, citing the chaos caused by Mr. Trump's trade policies. During Mr. Trump's first term in office, the German car companies were able to fend off his threat of tariffs by stressing the importance of their contributions to the U.S. economy. BMW, Mercedes and Volkswagen employ around 48,000 people in their U.S. factories, and German automotive suppliers provide an additional 90,000 jobs. Despite Mr. Trump's desire to shift production to the United States, Porsche has indicated that it has no intention of moving, citing its relatively low number of vehicles produced annually. But Porsche is a unit of the Volkswagen Group, which includes nine other brands such as Lamborghini, Audi and Volkswagen, which has a factory in Chattanooga, Tenn. Volkswagen's Scout brand is also investing $2 billion to build a factory in South Carolina. Analysts have reported that Audi is exploring the idea of shifting production of some models to the United States as a result of the tariffs, although the company has declined to confirm the decision. That move could be part of any prospective deal that German automakers are hoping to reach with the Trump administration. Porsche shares many parts and platforms with Audi. If Audi were to open a factory in the United States, that could pave the way for Porsche to follow, should the company eventually decide that production in North America made sense. For now, Porsche continues to see its future firmly linked to its reputation of being 'Made in Germany.' That label has taken a hit from the growing competition from Asian companies in recent years, but Germany and its leading products, including Porsche vehicles, still rank consistently among the world's best-known brands. 'There are a lot of examples of German brands that are household names,' said Cristobal Pohle Vazquez, an associate director at Brand Finance, a consulting company that studies name recognition worldwide. 'I think Porsche is a prime example.' That reputation, built up since the company's founding in 1931, and its loyal base of customers help give Porsche the pricing power to help ride out the storm, Mr. Hendrikse of Citi Research said. Like its parent company, Porsche has proved over time that it is able to make the changes necessary to take on new technologies and respond to crises. 'These companies have been around for 100 years for a reason — because they do adapt and they will adapt,' he said.
Bloomberg
21-05-2025
- Business
- Bloomberg
CoreWeave Surges Past Analyst Targets as Citi Doubles Theirs
CoreWeave Inc. 's rally is running so hot it's leaving analysts' stock predictions in the dust. Citi Research more than doubled their 12-month price target on the stock to a Wall Street high Wednesday morning. When the market opened shares blew past it in the first 15 minutes of trading. Marquee partnerships, optimistic revenue outlook and a renewed enthusiasm for all things artificial intelligence have driven CoreWeave to all-time highs, bucking some critical reviews from Wall Street. Gains are stretching into the fourth-consecutive session, on track for another record, while the stock has more than doubled from a late March initial public offering at $40 a share.
Business Times
21-05-2025
- Business
- Business Times
Steady buyer demand seen supporting stream of private home launches in H2 2025
[SINGAPORE] A bumper crop of private homes is set to hit the market in the second half of 2025, with projects large and small putting more than 9,000 units in the pipeline for the rest of the year. A Citi Research note released on May 15 indicated that 35 upcoming projects, including landed homes and executive condominiums, could be launched over the rest of the year, yielding a total of 9,339 units. A total of 5,320 new condos were marketed in 10 launches since January. Of the launches being lined up, 19 projects offering 5,487 units are in the Core Central Region (CCR), 10 launches with 1,157 units are in the Rest of Central Region (RCR), and six Outside Central Region (OCR) projects will launch 2,695 units, Citi's research found. Demand is expected to hold steady, though take-up is likely to vary across projects, Lee Nai Jia, head of real estate intelligence at PropertyGuru, told The Business Times. Buyers are becoming more selective, he said, and cited proximity to schools, MRT stations and daily amenities as being among the top priorities among home buyers. With macroeconomic uncertainty stemming from US President Donald Trump's tariffs, buyer sentiment has turned more cautious. Lee noted that following the tariff announcements, users on the PropertyGuru listings platform have gravitated towards private homes priced at around S$1.9 million, and HDB resale flats at about S$740,000. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up 'They have reached a kind of resistance level, and we should see that tension between buyer and seller expectations play out in the coming months,' he said. 'Transaction activity will probably still go on, but slow down a bit in the second and third quarters, depending on Trump's policies.' Lee, referring to the bulk of launches expected in the CCR in the second half, said their locations were generally attractive, but that those that lacked connectivity or nearby amenities may face slower sales. Developments coming up in the Central Business District area are expected to encounter relatively subdued demand, given the lack of amenities and fewer foreign buyers snapping up units following the imposing of stricter cooling measures. The government doubled the Additional Buyer's Stamp Duty (ABSD) for foreigners buying residential property to 60 per cent in April 2023, knocking the wind out of the high-end market. BT previously reported that there were only 14 foreign buyers of new condos in the CCR in Q1 this year, a significant tumble from the 92 in Q1 2023, before the ABSD hike. Including resales and sub-sales in the CCR, foreigners made up 4 per cent of the total of 733 transactions in Q1 2025. In Q1 2023, this group made up nearly 16 per cent of buyers in 1,027 transactions. Still, Lee reckons that slower projects may gain traction over time as surrounding neighbourhoods evolve through rezonings, or the launch of adjacent developments. Huttons Asia's chief executive Mark Yip observed that the market has 'settled into a more relaxed pace' in Q2, after a sharp increase in activities in the luxury non-landed homes market in Q1. Based on caveats lodged, 72 luxury non-landed units were sold in Q1, the highest in two years. This is 63.6 per cent higher quarter on quarter, and 35.8 per cent higher year on year, Huttons' data showed. The total value of luxury non-landed homes sold in Q1 was S$611.4 million, 64.2 per cent higher than in Q4 2024 and 59.9 per cent higher on year. 'Some buyers are making opportunistic offers, but there is little sign of distress in the resale luxury non-landed market at the moment,' said Yip in the quarterly Huttons Prestige Report released on May 14. ETC (formerly Edmund Tie & Company) expects residential prices to moderate. 'Overall housing supply rises with the ramp-up of Government Land Sales (GLS) – a trend that should help support market stability and sustain healthy transaction activity.' That said, PropertyGuru's Lee expects developers to be more selective when bidding for sites, as material and labour costs may rise and sales slow; he cited the recent GLS tender for Parcel B in Media Circle, which had no takers. In recent months, new home sales have slowed from the quickening that the market underwent in the last quarter of 2024 and in Q1 of this year. Citi analyst Brandon Lee also expects lower land bids in the near future. He wrote in a report that the slower home sales 'could result in more attractive land prices for eight upcoming government tenders from May to September'. Apart from site-specific factors, developers are also cautious on the back of the US tariff announcements. The tender for the Media Circle plot which drew no takers was the first to close since the US announced its import tariff hikes. Developers were also said to be discouraged by the lacklustre performance this month at the nearby Bloomsbury Residences, which sold just a quarter of its total 358 units at an average price of S$2,474 per square foot. The cool response to Bloomsbury Residence aside, a further supply of about 325 private homes is slated to come up on the nearby Media Circle Parcel A, which was awarded in March to another Qingjian-Forsea-led tie-up at S$1,037 psf per plot ratio. PropertyGuru's Lee expects developers to maintain their selling prices. 'If they price (the units) overly high – especially with more launches coming in the second half – they risk pricing out consumers or the sector. 'If they lower their prices, they are also in danger: when costs increase, their margins may be further reduced.' Citi projects average monthly primary sales to hover at between 500 and 700 units, supported by soft mortgage rates. This is a decline from the 1,000-to-1,600-unit level in January and February.
