The Zacks Analyst Blog Highlights: Volkswagen, General Motors, Nissan Motor,
Ford Motor and RLI Corp.
CHICAGO, Feb. 25, 2013
CHICAGO, Feb. 25, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Volkswagen AG (OTC:VLKAY),
General Motors Company (NYSE:GM), Nissan Motor Co. (OTC:NSANY), Ford Motor Co.
(NYSE:F) and RLI Corp. (NYSE:RLI).
Get the most recent insight from Zacks Equity Research with the free Profit
from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Friday's Analyst Blog:
China Auto Sales Jump 46%
According to the China Association of Automobile Manufacturers (CAAM), vehicle
sales in China jumped 46.4% to 2.03 million units in Jan 2013, mainly due to
the low base in the same month last year. The increase in sales was much
higher than last year. In 2012, sales grew 4.3% to 19.3 million vehicles.
Medium-sized cars and sports utility vehicles (SUVs) were the most popular
class of vehicles during the month, constituting 57.7% and 15.5% of the
market, respectively in the month. Small cars accounted for 20% of the market
while luxury lineups occupied a tad 3%.
Sales and Market Share by Automakers
(OTC: VLKAY) continued to be the leading automaker in the world's largest
market with 21.8% market share. Sales of its Audi brand surged 38.5% to 37,678
units. The second leading automaker was
General Motors Company
(NYSE: GM), which occupied 12.2% of the market. It saw a 26.0% rise in sales
to 310,765 units during the month.
GM operates three joint ventures in China. The first one is a 49%-51% car
manufacturing venture with Chinese automaker SAIC Motor Corp in Shanghai. The
second is a mini-vans and pick-up trucks three-way joint venture with SAIC and
Liuzhou Wuling Automobile in southern China. The third one is a light
commercial vehicles joint venture with FAW Group.
Nissan Motor Co.
(OTC: NSANY) was the third leading automaker in the country with more than 5%
market share. Nissan's sales escalated 22.2% to 115,700 vehicles in Jan.
Ford Motor Co.
(NYSE: F) saw the strongest sales increase among the foreign automakers in
China. Its sales leapt 98.0% to 61,475 vehicles during the month.
Ford manufactures Fiesta, Focus, Mondeo and other sedans in China in a
three-way joint venture with Chongqing Changan Automobile Co. Ltd and Japan's
Mazda Motor Corp. The company also has a 30% ownership in Jiangling Motors
Corp Ltd that produces Transit vans.
The domestic automakers in China accounted for 32% of the market. Some of the
leading companies among them are Geely, BYD, Great Wall and Chery. Meanwhile,
European brands constituted 25.8% of the market, Japanese brands 16.7%,
American brands 14.3% and Korean brands 11.0%.
According to CAAM, auto sales in China are expected to rise 7% to more than 20
million vehicles in 2013, led by strong demand for passenger vehicles and
economic recovery. The association believes SUVs will remain the fastest-
growing segment in the year while commercial vehicles will record a moderate
gain in sales.
However, the Chinese government is concerned about rising air pollution in the
country due to the ever increasing vehicles on the road. As a result, China's
State Council announced a stricter standard for auto fuel recently, which will
be promoted nationwide by 2017. These steps may damage the health of the auto
industry in China.
RLI Corp Upgraded to Outperform
On Feb 18, 2013, we upgraded our recommendation on RLI Corp. (NYSE:RLI) to
Outperform from Neutral based on its focus on business expansion and an
expected improvement in the rate environment. This property and casualty
insurer carries a Zacks Rank #2 (Buy).
Why the Upgrade?
Fourth-quarter earnings came in at 89 cents per share, much ahead of the Zacks
Consensus Estimate of 44 cents. Over the past four quarters, RLI Corp. has
delivered an average surprise of 26.4%. Revenues increased 4.5% from the
year-ago period to $171.4 million and was in line with the Zacks Consensus
Following the release of the fourth-quarter results, the Zacks Consensus
Estimate for 2013 has gone up 2.1% to $4.31 per share. Moreover, the Zacks
Consensus Estimate for 2014 has also increased 2.1% to $4.29 per share.
Through a strong local branch office network, broad range of product
offerings, and focus on specialty insurance lines, RLI Corp. has generated
underwriting profits through the last 16 consecutive years. It has also
remained focused on strategic partnerships and acquisitions to expand its
operations and foray into new markets. We believe the company will continue on
this path to reap benefits.
The company's sound capital structure helps it meet the interests of its
policyholders, enhance operations in the insurance sector and aid the growth
in its book value in the long term. Its trailing 12 month Return on Equity
(ROE) of 13.0% is much higher than the sector average of 6.7%. It's low
financial leverage and strong fixed charge coverage ratios also provide
significant financial flexibility to its operating subsidiaries.
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