IBD看好General Cable

7/2/2008

General Cable Corp（通用电缆）(代號:BGC) 是全球最大的特种电缆生产商，主要为美国的居民住宅和商务区提供上百万英里的电缆设备。到2030年美国的电力消费量将至少上涨40%，这是与能源价格上涨和美国人口膨胀息息相关的。为了满足这些需求，预计接下来是年内将有140亿美元投入到基础建设当中。General Cable最为世界第三大电缆制造商，将因此获利颇多。公司主要生产低、中、高电压的电缆，使用于电力传输以及配电线路方面。同时，公司还未工业、采矿业、军工业、原子能、汽车制造业以及通讯业提供相关产品制造。

Next Generation的分析师Nat Kellogg表示：“我们认为基建开支仍然刚刚开始，并将在接下来几年里在发达和发展中经济体中逐步提高。”但是对于General Cable来说的一大风险就是低电压电缆市场日益疲软，美国及其它国家的家庭用电市场日益下降。这主要是受到美国次级贷和经济减速的影响，同时房市的利空也施压于房屋建设市场，因此低电压电缆的需求日益下降。

General Cable在美国的三分之一的业务是与低电压电缆相关的，一季度北美销售额下降了10%至5.407亿美元。公司CEO表示：“尽管近期北美市场需求下降，我们仍然看好长期的经济基本面，认为将迎来较高的业绩涨幅。”

欧洲市场的业绩将弥补上述的不利影响。公司将把在西班牙的30%生产能力转移至欧洲、北非以及中东地区。同时，收购活动将进一步推动公司利润增长，投资组合扩大加上市场范围扩展都将有利于业绩增长。正是由于多元化的收购战略， General Cable才能够成为一家立足于美国面向世界的大型生产商，一季度的国际销售额占到总营收的70% 。去年公司就以7.1亿美元收购了Phelps Dodge International，可谓是获利颇丰、硕果累累。

Morgan Keegan 分析师Keith Johnson表示：“世界市场对多种产品组合的需求强劲，许多发展中国家正在大力电网并扩展石化、炼油以及采矿行业，因此General Cable将从中获得巨大利润。”过去两年里，General Cable收购了包括Phelps Dodge在内的四家企业，这巩固了公司在世界范围内的行业霸主地位。去年公司又收购了德国的Norddeutsche Seekabelwerke，为公司增加了近海水下电力和海底光纤投资组合能力。今年公司又获得了第一份价值3000万美元的近海风力发电厂合同。

General Cable每年需要消耗近8亿磅铜和4亿磅的铝。期货铜价格为每磅3.7美元，其它原材料价格也有不同程度的涨价，但是General Cable有能力消化原料涨价带来的不利影响。今年一季度General Cable每股收益为1.21美元，同比为1.01美元，营收上涨了55%至15.7亿美元。公司将在7月28日公布二季度业绩，共识为每股收益1.31 美元，营收为17.3亿美元。

Investor's Business Daily
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Tuesday July 1, 6:22 pm ET
Brad Kelly

The electrical grid in the U.S. delivers power along millions of miles of cables to neighborhoods and businesses. Electricity plays a critical role in U.S. society and is vital to the nation's economic strength.

Electricity consumption will have to increase by at least 40% by 2030 just to keep pace with the energy needs of the constantly expanding U.S. population, according to the Edison Electric Institute.

To meet demand, utilities are expected to inject $14 billion a year over the next decade on distribution lines -- or low- to medium-voltage cables -- and $8 billion to $9 billion on the high-voltage transmission lines, the institute said.

General Cable (NYSE:BGC - News), the world's third-largest wire and cable maker, stands to benefit the most, says Nat Kellogg, a Next Generation analyst.

The company makes low-, medium- and high-voltage cables primarily used for electrical transmission and distribution lines. It also manufactures cable for the industrial, mining, military, nuclear, automotive and communications markets.

Improved Grids

The U.S. and Europe continue to improve the integrity of existing grids, while developing nations have worked to build out their electrical grids. Both will be growth drivers for General Cable, says Next Generation analyst Nat Kellogg.

"We believe infrastructure spending is still in the early stages of a multiyear upgrade and buildout cycle in both developed and emerging economies," Kellogg said.

He added that it behooves utilities, which are in better financial condition today than they have been in the past, to upgrade and improve the integrity of the grid to deliver more energy efficiency and power to customers.

One risk for General Cable is the softness in the low-voltage cable market, or home electricity, in the U.S. and in countries such as Spain.

The U.S. economic slowdown triggered by the subprime meltdown could delay spending on distribution lines to residential neighborhoods. With new-home construction sinking to its lowest level since 1991, the need for low-voltage lines is declining.

A third of General Cable's U.S. business is tied to low-voltage distribution cables for homes. In the first quarter, North American sales fell 10% to $540.7 million on a metal adjusted basis.

"Despite recent reductions in cable demand from the North American utilities, we continue to view the long-term fundamentals for transmission cable in North America to be strong and expect low-voltage electric utility products to recover with the construction cycle in the U.S.," said CEO Gregory Kenny in an earnings statement.

Strength in the European electric markets will help offset the impact of Spain's weak construction sector. The company also moved roughly 30% of its production capacity in Spain to other markets in Europe, North Africa and the Middle East.

General Cable has wisely spent money to create a global footprint and is well-positioned to benefit from rapidly increasing energy demand in Egypt, United Arab Emirates and Saudi Arabia, Kellogg says.

Acquisitions typically aim to boost profit, broaden a portfolio or expand a geographic footprint. And no one is better at capturing all three in one fell swoop than General Cable.

The company's acquisitions have made it one of the most geographically diverse U.S.-based global manufacturing companies. International sales accounted for 70% of total revenues in the first quarter.

No acquisition proved as fruitful than its $710 million purchase last November of Phelps Dodge International, the wire and cable business of mining giant Freeport-McMoRan (NYSE:FCX - News).

The Phelps Dodge transaction was the primary reason why revenue in General Cable's Rest of World segment -- which includes Central and South America, sub-Saharan Africa, Southeast Asia, China and India -- was up $432.4 million.

Projects such as Lights for All in Brazil, China's construction boom and the energy needs of Peru's massive mining operations will sustain General Cable's growth for years to come, Morgan Keegan analyst Keith Johnson says.

"Demand in the (Rest of World) segment for most of the product types continues to improve as countries build out electrical grids (and) expand petrochemical, refining and mining operations," he said. "The company is well-positioned to benefit from these trends."

Over the past two years, General Cable has purchased four firms, including Phelps Dodge, that cement its position around the globe and broaden its product offerings.

Last year, General Cable bought Germany's Norddeutsche Seekabelwerke, which added offshore underwater power umbilicals and submarine fiber optic to its portfolio.

The acquisition was key in obtaining two lucrative underwater contracts this year, including a $40 million contract in April to install a fiber optic undersea communication link that will stretch 2,600 miles long in depths of water of up to 11,000 feet.

General Cable won its first offshore wind farm contract, worth $30 million, in January this year. It will produce 66 miles of cable that will harness the electricity generated by the wind turbines in the North Sea for transmission back to shore.

General Cable and its subsidiary maybe the best positioned to win underwater and submarine contracts over some of its top competitors, including French cable maker Nexans, U.S.-based Southwire and in some product lines Belden (NYSE:BDC - News).

"Most of the players have similar products, so obtaining contracts will come down to price," Johnson said. "But General Cable brings to the table its expertise and its proven ability to complete projects and that is a big advantage."

Cooper And Aluminum

General Cable processes about 800 million pounds of copper and 400 million pounds of aluminum each year. Copper futures are hovering over $3.70 per pound, which is about 44% higher than the red metal's historical average.

Other raw materials costs continue to fluctuate higher, but General Cable was able to pass those costs along, Johnson said. An increase in metal prices was an additional factor in revenue growth.

"Because of the strength of our broad-based global infrastructure products, the company was able to overcome rapidly rising copper prices during the latter part of the (first) quarter and a weak U.S. economy to deliver 20% earnings growth," Kenny said.

General Cable earned $1.21 a share in the first-quarter compared with $1.01 from a year earlier.

Revenue soared 55% to $1.57 billion.

It will announce second-quarter results on July 28. Wall Street is expecting profit of $1.31 a share on revenue of $1.73 billion.