Saturday, May 03, 2014

China electric vehicle manufacturer relies on Government support

Saturday, May 03, 2014
I've got a lot of attention before a few days U.S. electric vehicles (EV) sensation Tesla (NASDAQ: TSLA), so it's only fair that I by writing about China's home-made EV superstar BYD-up follow-up (OTC: BYDDF;) HKEx: 1211; Shenzhen: 002594), which recently published quarterly figures, which look quite disappointing. The only things that look like something encouraging in this latest report are the fact that billionaire investor he bought that in 2008 its 10-percent stake in the company to keep Warren Buffett, still, and that BYD is lucrative. But also the gains strong support from Beijing in its programme to promote clean-energy vehicle development.

If I had to describe BYDs recent performances in a single thought, I'd say that pretty good pilot programs set up this company for its EVs but has found it difficult to translate these programs in large companies. In the last three years, BYD has announced a steady sequence of such pilot programs in a variety of markets, from Western Europe, the United States and Latin America, as well as in its home market of China. But with a few rare exceptions, we need to have one of these programs turn you into the major orders that BYD has its EV program long term profitable to make.

Everything, what say we take a closer look of BYDs latest quarterly results, to show its profit largely evaporated in the first three months of the year. The company reported a first quarter net profit of around 12 million Yuan, or just over $2 million, which was 90 per cent compared to the previous year. This is quite a small figure for a company whose Umsatz amounted to nearly 12 billion yuan for the quarter was down a more modest 9 percent.

BYD reported by 98 million Yuan it received Government grants in the quarter which means that it would have almost certainly lost money, without this support. Of course not we can subtract that amount from its total profit directly, but I think it is fair to say that the company help would have reported a loss of 50 million Yuan or more without this Government.

BYD's Hong Kong traded shares fell 2.8 percent before the report came, although some the reason the latest trading session got back on Friday. The stock has over the last year and a half, more than tripling since October 2012 on enthusiasm about the EV program actually collected anything. But I suspect that this latest disappointing result could force investors to recognize the company's electric dreams materialize are not, as hoped, and could a mark the beginning of wider selloff, the stock drop by a third or more in the next few months could see.

BYD is in the difficult position of waiting on the EV business to launch, fruits as its older battery and traditional gas-powered car companies show signs of aging. BYD earlier said it will leave the gas powered car business altogether by 2015 as the future in electric vehicles. The company also announced a major plan a year ago, to raise up to $500 million by issuing new shares in a bid to shore up its cash position.

I mostly excited about BYD everytime wrote it a new EV pilot, as such programs announced, to test the technology before larger orders are a necessary first step for customers. But the fact that we some large orders appropriate means until probably three years later on, that many of these pilot programs were not as smooth as BYD had hoped and maybe the buyer doesn't see how the technology. The not sure bode well for the future of the company, which means that BYD Government support its bottom line for the rest of this year and possibly in 2015 could depend on.

Bottom line: BYD's latest results show his EV sales are not accelerated, as fast as planned and it will support its bottom line depending on Government subsidies for the rest of this year.

This blog was originally released on young's China business blog and was published with permission.

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Thursday, May 01, 2014

GE Reportedly in Talks to Buy France’s Alstom for $13 Billion

Thursday, May 01, 2014
London and New York -- General Electric Co. is in talks to buy Alstom SA, the French builder of trains and power plants, people with knowledge of the matter said, in what would be GE’s biggest acquisition ever.

An agreement may be announced as early as next week, said the people, who asked not to be identified because the talks are private. The U.S. company may pay more than $13 billion for Alstom, one of the people said. That would be about 25 percent more than its current market value. Alstom surged as much as 18 percent in Paris trading today, the biggest jump since 2004.

The deal would give the U.S. maker of jet engines and locomotives control of Alstom’s technology for power transmission and power plant maintenance as Europe’s economy starts to revive. A purchase of Alstom, which also sells high- speed TGV trains and rail signals, would be a rare example of a major French company being taken over by a U.S. rival.

“Acquiring Alstom would put an exclamation point on GE’s return to deals,” said Sanford C. Bernstein analyst Steven Winoker. “It is among the best fits we have seen with the GE portfolio for some time.”

GE has been shifting its focus toward units that make jet engines, locomotives and industrial equipment and shrinking the finance division, called GE Capital, which imperiled the company during the global financial crisis. Alstom, based in the Paris suburb of Levallois-Perret, has been selling assets to cut costs and reduce debt.

Shifting Focus

GE Chief Executive Officer Jeffrey Immelt would be able to tap the company’s foreign cash reserves to finance the deal, one of the people said. GE had about $89 billion in cash at the end of last year, including $57 billion held outside the U.S. Large infrastructure contracts increasingly require bidders to put up financing, putting Alstom at a disadvantage.

Fairfield, Connecticut-based GE has the support of Alstom shareholder Bouygues SA, said the people. The French conglomerate owns about 29 percent of Alstom.

“Alstom is not informed of any potential public tender offer for the shares of the company,” it said in an e-mailed statement today. “The group constantly reviews the strategic options of its businesses.” Seth Martin, a spokesman for GE, declined to comment. A Bouygues spokesman said the company supports Alstom and its strategy. He added that Bouygues doesn’t control Alstom, declining to comment further.

Seeking Targets

Alstom shares surged as much as 4.35 euros to 28.69 euros in Paris and were up 13 percent as of 11:17 a.m. Before today, the stock had dropped 20 percent over the past year, making it a cheaper target for GE.

Immelt said this month that GE is looking to make acquisitions in the range of $1 billion to $4 billion and will spend more for targets “that have excellent values, strong synergies, fit our growth strategies and are immediately accretive.”

After years of holding back, large companies are staging a dealmaking comeback in western Europe, with the fastest start to M&A since 2008, before the global financial crisis. The value of takeovers involving companies in the region since the beginning of the year stands at $301 billion, up 20 percent from a year earlier, according to data compiled by Bloomberg.

Protecting Companies

About 640 French companies were acquired by U.S. companies over the last decade for a total of $77 billion, according to data compiled by Bloomberg. Among the biggest deals were the $7.2 billion sale of Danone’s cookies and crackers unit to Kraft Foods Inc. in 2007 and the purchase of Sperian Protection SA by Honeywell International Inc. in 2010 for $1.4 billion.

France’s government can intervene to protect companies it deems to be of national importance from being acquired. In 2005, it passed an anti-takeover decree amid speculation PepsiCo Inc. was planning a bid for Danone.

Alstom is the world leader in turbines for dams, while it lags GE and Siemens AG in gas turbines. It is the third-largest maker of power transmission gear after ABB Ltd. and Siemens, and competes with the German company and Canada’s Bombardier Inc. in the market for trains and other rail equipment.

Alstom CEO Patrick Kron in November outlined plans to sell as much as 2 billion euros in assets including a minority stake in its rail unit by the end of 2014. The company named Bank of America Corp. and Deutsche Bank AG to prepare the rail business deal, people familiar with the matter said in January.

Alstom also is cutting 1,300 jobs, mainly at its information-technology department and boiler units, to reduce costs by as much as 1.5 billion euros by April 2016. The French company is pushing for savings in Europe while investing in partnerships and plants in countries such as China, Russia, Brazil, India and South Africa to tap demand for trains and turbines.

Antitrust Issues

A combination does raise the prospect of European antitrust issues. United Parcel Service Inc., the world’s biggest package-delivery company, scrapped a 5.16 billion euro bid for TNT Express NV last year after European regulators moved to block the deal. GE’s attempt to buy Honeywell International Inc. in 2000 was scuttled as well.

GE and Alstom have already held talks with French government officials about the proposed takeover to preemptively address potential political concerns, one of the people familiar with the situation said.

Shedding Assets

Immelt has been shedding assets, including the sale of NBC Universal last year for $16.7 billion, and using some of the cash for acquisitions that fit his vision for the company. The company has made several purchases in the oil and gas industry, including paying $3.3 billion in April 2013 for Lufkin Industries Inc.

Alstom would be GE’s biggest acquisition, according to data compiled by Bloomberg dating back to 1986. The only deal that would have been larger was its attempt more than a decade ago to buy Honeywell for about $53 billion, including the assumption of debt, the data show.

Alstom had to be bailed out by the French government and banks in 2004 after a series of technical flaws in a gas turbine business it had bought from ABB pushed the company close to collapse in 2003.

Copyright 2014 Bloomberg.

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Saturday, April 19, 2014

Building-Integrated Solar Air Heating Systems Proving Popular

Saturday, April 19, 2014
For some parts of the United States, such as Upper Michigan, the winter of 2013-14 was the coldest in recorded history. In Marquette, for example, the average temperature was a tundra-like 7.5 degrees.

Well, what if I told you that it’s possible to cut your building’s energy use (in some cases by up to half), while protecting the environment, too? Sign me up, right? Simply put, innovative solar heating and cooling systems (SHC), which are growing in popularity nationwide, could be the winning ticket for you.

According to new industry data, a growing sector of the U.S. solar energy industry has reached a major new milestone, with 5 million square feet of building-integrated solar air heating collectors now installed in North America. These systems represent 250 megawatts (MW) of thermal energy and displace nearly 100,000 tons of CO2 each year from the atmosphere.

Unfortunately, building-integrated solar air heating systems are often overlooked in the discussion about renewable energy. It’s time to change that mindset. These cost-effective, energy-efficient systems can reduce by 20 to 50 percent the amount of conventional energy used for heating buildings – or for agricultural or process drying applications. That can represent a huge savings to companies, business owners and farmers nationwide.

Solar air heating systems work by heating incoming ventilation air before it is brought into a building’s heating, ventilation and air conditioning system (HVAC), using wall-mounted collectors that are typically made of metal and have 30-plus year lifespans.

By our estimates, we can create more than 50,000 new American jobs and save $60 billion in energy costs over the next 30 years by expanding the use of SHC systems across the United States. Today, approximately 44 percent of all American energy consumption is attributable to heating and cooling. As a nation, it’s time to re-think our strategy for generating energy for our homes, businesses, schools and government buildings.

According to BEAM Engineering, a Boston-based energy consulting firm, SHC is the most efficient renewable technology for generating thermal heat and costs are as low as 6 cents per kilowatt (kWh) hour. Last year, SEIA’s Solar Heating and Cooling Alliance released a comprehensive report, detailing how SHC technologies can help to power the U.S. economy, while significantly reducing pollution. So the next time your electricity meter is spinning like a dog chasing its tail, think about how nice it’d be to spend less money for energy – and more money on yourself!

The information and views expressed in this blog post are solely those of the author and not necessarily those of or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.

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