🚛 The KAMAZ group of companies is the largest automobile Corporation in the Russian Federation. PJSC "KAMAZ" is one of the world's 20 leading manufacturers of heavy trucks and is on the 16th place in terms of production of heavy trucks with a gross weight of more than 16 tons.
📌 Share capital structure:
47.10% - Rostech State Corporation;
23.54% - Avtoinvest LLC - a group of freight forwarding companies engaged in cargo transportation in Russia and abroad;
15.00% - Daimler Truck AG-a multinational automobile manufacturer with its headquarters in Stuttgart;
14,36% - free-float.
🌏 Set of assets:
💎 The main production site is located in Naberezhnye Chelny, where the following enterprises are located:
автомобильный automobile Plant - collects trucks, chassis, produces spare parts, processes parts and components.
▫ This frame and stamping plant stamping parts, assembling frames, painting.
Лит foundry (in SK. - capacity per year) - production of castings from cast iron (246 thousand tons), steel (61 thousand tons), non-ferrous metals (35 thousand tons).
▫️ Engine plant.
▫ This is the factory of the frames of the cabins of KAMAZ and Mercedes Benz (welding, painting), architecture in 2019.
▫ This forging plant - manufacturing of forgings, manufacturing of dies and tooling (206 thousand tons per year).
ПАО PJSC "NAFAZ" is a plant specializing in the production of various buses: urban, suburban, intercity, intercity in the Northern version, with an engine running on methane gas, high comfort tourist class, low-floor and semi-low-floor. Located in Bashkortostan.
ПАО PJSC "TZA" (tuymazinsky plant of concrete trucks) - the main specialization of the company-design and production of special equipment for construction, municipal, agricultural, oil and gas industries. Business card-concrete mixers and concrete pumps.
⚙ Lot of PJSC "tutaevsky engine plant (TMZ)" - specializiruetsya on the production of diesel engines for trucks.
АО KAMAZ Engineering JSC is a truck Assembly plant in Kazakhstan.
АО JSC "Leasing company" KAMAZ " - is engaged in the sale of cars produced by KAMAZ and special equipment on the chassis of KAMAZ in leasing from the manufacturer. It was established in 2002, having sold 54 thousand units of vehicles during this time. The leasing portfolio as of October 1, 2019 is more than 41 billion rubles.
The company also has other Assembly plants located in Kazakhstan, Lithuania, Uzbekistan, Azerbaijan, India, and Vietnam. In Russia, KAMAZ has a wide dealer network, which includes 164 centers. Abroad, the company has 96 dealer entities, 30 of which are located in foreign countries, and 60-in the CIS.
⚖ Good but a little on the situation in the industry and world trends:
Кам KAMAZ ranks 16th in the world among manufacturers of trucks with a gross weight of 16 tons and above with a production volume of more than 35 thousand vehicles per year. For comparison, Daimler, which is a shareholder of KAMAZ, produces more than 305 thousand tons per year.
✅ The Russian market for heavy-duty vehicles is only about 3% of the world market. Unfortunately, after 2012, the volume of our market fell sharply from 105 thousand units per year to 36 in 2015. Over the past 3 years, the volume has been changing inactive, amounting to about 63 thousand tons per year.
✅ The company dominates our heavy-duty car market with a share of about 44%, down from a record 56% in 2016. A serious competitor is European brands, which currently hold about 39% of the market. URAL, MAZ, Chinese brands and others account for no more than 18%.
✅ In the market of medium-duty cars, KAMAZ has only 4%.
In 2019, the company received 190.4 billion rubles in revenue, an increase of some 2% compared to 2018. In 2016, revenue was 132.3 billion rubles. Let's look at its sources:
Грузов trucks and Assembly kits (by year, in billion rubles, as % of the total):
2016 - 93,4 (70,6%)
2017 - 106,4 (68,2%)
2018 - 117,6 (63,2%)
2019 - 114,4 (60,1%)
⚙ Lot spare parts (for years, in RUB billion, % of total):
2016 - 18,4 (13,9%)
2017 - 28,5 (18,3%)
2018 - 24,9 (13,4%)
2019 - 26,8 (14,1%)
🚌 Buses, trailers, concrete mixers (by year, in billion rubles, as % of the total):
2016 - 9,4 (7,1%)
2017 - 9,6 (6,2%)
2018 - 11,4 (6,1%)
2019 - 17,4 (9,1%)
Комплектующие components (by year, in billion rubles, as % of the total):
2016-no data
2017-no data
2018 - 17,8 (9,6%)
2019 - 16,7 (8,8%)
💵 Finance lease income (by year, in billion rubles, as % of total):
2016 - 1,3 (0,9%)
2017 - 1,5 (0,9%)
2018 - 2,3 (1,2%)
2019 - 3,6 (1,7%)
⚒ Products of metallurgical production (by year, in billion rubles, as % of the total):
2016 - 2,2 (1,7%)
2017 - 2,9 (1,9%)
2018 - 3,4 (1,8%)
2019 - 2,6 (1,4%)
⛓ Production services (by year, in billion rubles, as % of total):
2016 - 3,6 (2,7%)
2017 - 3,2 (2,1%)
2018 - 2,3 (1,2%)
2019 - 2,1 (1,1%)
🧲 Other (by year, in billion rubles, as % of total):
2016 - 3,8 (2,9%)
2017 - 3,9 (2,5%)
2018 - 6,4 (3,4%)
2019 - 6,7 (3,5%)
There is a tendency to reduce the role of the truck segment in the company's revenue structure. However, bright growth in other segments is not visible. Only buses give more or less tangible growth, everything else - not too large amounts. On the other hand, the company has increased revenue by almost a third in 4 years, so maintaining approximately the same shares in its structure indicates a balanced development.
📌 The company's strategy from 2020 to 2025:
✅ It is planned to increase revenue to 340 billion rubles, sales of trucks from 36 thousand units to 52 per year, expand the share of sales abroad to 19% (by the way, the company's GO says "abroad", interesting...).
✅ The company wants to expand the model range of K5 generation trucks (automatic, 450 HP engine, 2 fuel tanks for 1400/900 liters), as well as develop innovations by creating Autonomous, electric trucks. Other interesting projects include digitalization of production, supply chains and sales via the Internet of things, and "special Sharing" - an arena of trucks for organizations.
✅ It is planned to increase the market share of buses, spare parts( and economy parts), trailers and semi-trailers. The company is also going to reduce staff due to robotization.
📌 Interesting:
KAMAZ constantly wins the Dakar race, which proves its reliability. Nevertheless, this is a controversial statement: many parts are purchased abroad, and the victory is ensured by the orientation of KAMAZ on the off-road (when competitors build cars for normal conditions). A sports team is also extremely expensive - about $10 million a year.
⚡ This appeared recently in Moscow, the buses will continue to be supplied to the city. They can fully charge in 10-20 minutes, have a maximum speed of 70 km / h, a maximum power reserve of 70 km, and cost 20-30 million rubles. In fact, there are a lot of questions about this model, but it looks respectable. Inside it is also very comfortable: everywhere charging for phones, lighting on the floor, air conditioning, and so on.
Financial analyses
📌NWC
201️⃣6️⃣: 34.735
201️⃣7️⃣: 18.098
201️⃣8️⃣: 29.558
201️⃣9️⃣: 33.761
Despite the positive dynamics over the past 3 years, net working capital has not yet reached the level of 2016. Nevertheless, we believe that the stable growth over the past 3 years indicates a good trend: the company increases its current assets in a greater proportion than its short-term liabilities.
📌Current ratio
201️⃣6️⃣: 1,66
201️⃣7️⃣: 1,25
201️⃣8️⃣: 1,35
201️⃣9️⃣: 1,46
With current liquidity, things are about the same. The company is liquid and its liquidity has been growing over the past 3 years.
📌Quick ratio
201️⃣6️⃣: 0,78
201️⃣7️⃣: 0,50
201️⃣8️⃣: 0,45
201️⃣9️⃣: 0,62
The quick liquidity indicator is below 1. This means that in case of force majeure, the company's financial stability will be disrupted.
📌Debt ratio
201️⃣6️⃣: 0,72
201️⃣7️⃣: 0,76
201️⃣8️⃣: 0,80
201️⃣9️⃣: 0,81
The debt ratio has been growing for all 4 years. The indicator is at very high levels, which indicates a shaky financial position of the company.
📌Net debt/EBITDA
201️⃣6️⃣: 6,27
201️⃣7️⃣: 5,02
201️⃣8️⃣: 9,56
201️⃣9️⃣: 9,99
The ratio of net debt to EBITDA is extremely high, and it only increases every year. This means that KAMAZ will not pay off its loans soon.
📌Growth of revenue
201️⃣6️⃣: 35,76%
201️⃣7️⃣: 17,93%
201️⃣8️⃣: 19,34%
201️⃣9️⃣: 2,27%
📌Growth of net income
201️⃣6️⃣: 68,97%
201️⃣7️⃣: (-81,01)%
201️⃣8️⃣: 142,07%
201️⃣9️⃣: (-233,11)%
📌Profit margin on sales
201️⃣6️⃣: 2,61%
201️⃣7️⃣: 0,42%
201️⃣8️⃣: 0,85%
201️⃣9️⃣: (-1,03)%
A small increase in revenue in the last year directly affected the net profit (or rather loss). A small part of the revenue reaches the net profit, which indicates huge cost items and their ineffective control by management.
📌Payout ratio
201️⃣6️⃣: 8,28%
201️⃣7️⃣: 110,02%
201️⃣8️⃣: 0,00%
201️⃣9️⃣: 0,00%
Accordingly, the company does not pay dividends. An unreasonably large payout in 2017 indicates the lack of a competent dividend policy. And apparently, KAMAZ does not intend to do it seriously yet.
📌ROA
201️⃣6️⃣: 2,03%
201️⃣7️⃣: 4,77%
201️⃣8️⃣: 2,68%
201️⃣9️⃣: 2,17%
📌ROE
201️⃣6️⃣: 9,09%
201️⃣7️⃣: 1,69%
201️⃣8️⃣: 3,98%
201️⃣9️⃣: (-5,04)%
Profitability indicators are at an extremely low level, indicating problems in the company's performance. And the downward trend says things are getting worse and worse.
📌FCF
201️⃣8️⃣: (-14.206,00)
201️⃣9️⃣: (-5.242,40)
Free cash flow has been negative for two years. On the other hand, it has increased by more than 2 times.
📌SGR
201️⃣6️⃣: 8,34%
201️⃣7️⃣: (-0,17)%
201️⃣8️⃣: 3,98%
201️⃣9️⃣: (-5,04)%
The Sustainable growth rate is either very low or negative. KAMAZ is not able to develop at its own expense, largely due to the low share of net profit.
📌WACC=7,42%
The WACC score is very high compared to other companies. In addition, it is more than ROA, which directly indicates the inefficiency of the company.
📌Q ratio=1,06
The Tobin coefficient is just above one. KAMAZ is fairly valued by the market, despite its borderline value. Apparently, investors do not believe in the company, given its capitalization.
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📌E(M)=0,32%
📌st=3,76%
The average weekly return and risk are the same as the market average.
📌beta=0,62
The beta indicator means that KAMAZ shares are growing more slowly than the market. With the market growing by 1%, KAMAZ shares are growing by only 0.62%.
📌correl=0,45
The correlation index Mosberg less than 0.5 indicates a low dependence of KAMAZ from the index.
📌Min=36
📌Max=72,4
📌CurrP=59,90
Today's price of KAMAZ is closer to the upper limit. However, we doubt that the maximum can be reached in the near future, all other things being equal.
📌TSR=(-13,81)%
📌km=(-4,40)%
For 2020 KAMAZ shares have fallen more than the index Mosberg. This indicates that investors have little faith in the company.
📌MAR
201️⃣7️⃣: 111,70%
201️⃣8️⃣: 101,79%
201️⃣9️⃣: 92,66%
2020: 90,16%
For 1.5 years now, the market adjusted return is below 100%. This trend began in 2018, when the share price reached the lowest level. KAMAZ shares do not beat the market.
💹 The company's strengths and positive factors for it:
🔱 High market share. As we have already said, the peak was in 2016. Then there was a significant decrease in car production, but in 2019 sales again slightly increased. Today, KAMAZ has 44% of the Russian market. This is justified, first of all, by the cheaper cost and price. As they say on specialized portals, 1 KAMAZ costs as 2-1. 5 foreign cars, and parts for the latter are up to 4 times more expensive.
🚫 Old car fleet in Russia. Statistics show that 2/3 of the truck fleet in Russia is more than 11 years old. 46% of cars are over 16 years old. This indicates a rather slow renewal of the automobile Fund. Accordingly, we can expect an increase in demand and production in the future. Still, at the best of times, the company produced 50% more trucks.
🖥 Technologies. First, KAMAZ is now starting to produce an updated version of its K-5 trucks. It is more eco-friendly and convenient for the driver. The company's machines have traditionally been criticized for their lack of worker amenities. Now the interior looks much better.
Secondly, only 4 companies are currently engaged in the topic of unmanned vehicles in Russia: Beber, Yandex, KAMAZ and GAZ. Of course, we are skeptical about the capabilities of KAMAZ, but nevertheless. After all, Yandex is unlikely to adapt the technology for trucks, so KAMAZ has more time to develop its own technologies. In any case, the fact that the company was included in such a list at the government level means something.
⚡️ Electrobuses. Continuing the topic of technology, we can not say nothing about the trends of our time that KAMAZ has managed to implement. Electric buses have become an interesting innovation on the roads of the capital. They look very nice, and Moscow has already signed the following purchase contracts. In General, we expect production growth here at KAMAZ.
🏛 The name of the world and state support. We cannot but agree that KAMAZ is a Russian brand that is known not only in our country. Even the company's shareholders are a major German automaker. And some foreigners prefer our truck because of the lower price.
During the pandemic, when the company was faced with a lack of orders, the Government helped by increasing the plan for purchasing cars for state needs. Most likely, during difficult periods, KAMAZ will not be left in the lurch, especially since it is a Tatar company.
📛 Company's weaknesses and triggers:
Ков covid consequences. It seems that more than one review has not done without mentioning this topic. And the review of KAMAZ will not be an exception, because The company mainly serves medium and large businesses, which everywhere reduces investment programs and employees. In such circumstances, it is unlikely that updating the fleet will be a priority. On the other hand, the demand for cheap KAMAZ trucks may increase abroad (as a substitute product).
🪓 Huge debt. The debt load of KAMAZ is located on the extreme values. This is because the company invests a lot in the new generation of trucks - K-5. It is not yet known whether the investment will be justified, but it is really dangerous to invest in KAMAZ now.
❌ No dividends. For the second year, the shares are not happy with either growth or dividends. The situation is unlikely to change by the end of 2020.
👎 Poor working conditions. KAMAZ has about 57 thousand employees. The salary Fund is 24.6 billion rubles a year. The average monthly salary is slightly more than 36 thousand rubles. Just think about it, this is the average salary. But shop managers, engineers, and so on probably get at least 80 thousand. It turns out that an ordinary hard worker can earn only about 17 thousand. Yes, KAMAZ trucks are distinguished by their cheapness, but this, we think, is too much...
❓ In reality, KAMAZ is bought only because of its cheapness. The market has not yet evaluated the new models of KAMAZ trucks. Drivers since Soviet times treat the truck with disdain. And since they are quite conservative people, they rarely choose KAMAZ if they work as truckers. Most likely, the demand for cars is supported only by the state and state-owned companies. Other consumers prefer a used foreign car to a modern KAMAZ.
❗️ Technical analysis ❗️
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What to do with KAMAZ?
Overall, the company's business performed well. The company's leading position in the heavy truck industry, certain diversification of revenue sources, and global popularity are the company's undoubted advantages. However, as practice shows, KAMAZ has a number of systemic problems.
First, the main competitive advantage of the company is still the low price of cars. Drivers perceive this as an indicator of lower quality. The automotive industry is very conservative, so if there is a certain perception of the product in the public consciousness, it will not change quickly. This is true for KAMAZ. It seems that the company already produces modern and comfortable cars, but there are still prejudices against them.
Working conditions at enterprises leave much to be desired, primarily because of the salary. Today, they are excessively low, which means that in the future, KAMAZ may increase costs, since you can't keep good specialists for a penny.
Electric and self-driving cars can become interesting new areas of the company's activity. The first ones have already started to be implemented in the form of buses on the streets of Moscow. KAMAZ also tries to constantly upgrade its vehicles. This partly explains the problems with finances: it took a lot of money to bring a new model to the market.
Financial analysis has shown that despite the company's good liquidity, KAMAZ remains absolutely inefficient. Profitability is falling, while revenue and net profit growth also leaves much to be desired. The net debt/EBITDA indicator, which is at extremely high levels, has particularly attracted our attention.
The analysis of the security showed similar indicators of average return and risk as other companies. Nevertheless, KAMAZ shares have not outperformed the market for 2.5 years.
Technical analysis showed a downtrend on the short-term chart, but a reversal is likely in the near future.