Roads & Transportation

Brookfield on slow train to infrastructure payback

1 July 2019

The investor and Singapore’s GIC are buying U.S. railroad group Genesee & Wyoming for about $6.4 bln. The return on total investment works out under 5%, partly reflecting the scarcity of transport assets. Brookfield at least has the portfolio and experience to squeeze out more.

Fiat-Renault M&A collapse creates losers all round

6 June 2019

The Italian-American carmaker withdrew a merger offer after the French state sought to delay a decision. The companies lose 5 bln euros of synergies, while Renault and Nissan remain stuck in a frayed alliance. Paris has flubbed an opportunity to show its pro-business credentials.

Fiat’s French appeasement game is means to an end

3 June 2019

Chairman John Elkann is mulling concessions to get the French state to greenlight the $35 bln Renault merger. A board seat for Paris and some cash shouldn’t risk planned cost savings, or Nissan’s assent. It’s a small price to pay for first-mover advantage in car consolidation.

Renault-Fiat merger savings matter more than price

31 May 2019

The French carmaker’s board may feel a proposal by its Italian-American rival takes advantage of a depressed share price. The bigger prize, though, is synergies worth 50% of combined operating profit. If those are credible, Renault should not quibble too much about valuation.

Greyhound sale is first leg of owner’s long trip

30 May 2019

Under pressure from an activist, Britain’s FirstGroup is selling the iconic U.S. coach group and spinning off its UK bus unit. Simplifying the $1.8 bln group should unlock value. But uncertainty over timing and liabilities means investors are miles away from their destination.

Arduous road awaits refueled Chinese used-car app

29 May 2019

Uxin is issuing $230 mln of convertible bonds, including to existing investors TPG and Warburg Pincus. It follows a 70% loss in market value since last year's IPO. A short attack, China’s slowdown and generous terms make it hard to see the deal as accurately calling a bottom.

Greyhound breakup is worth the trip

20 May 2019

Activist Coast Capital wants the U.S. coach chain’s parent FirstGroup to spin off its loss-making UK parts and stop bidding for rail franchises. Pension liabilities and valuation debates complicate matters. But even on a pessimistic view, investors could double their money.

Elon Musk rewrites fast-moving Tesla cash story

17 May 2019

The electric-car maker’s CEO is mandating “hardcore” cost controls, admitting Tesla could burn $2.4 bln of new capital in 10 months. That puts growth plans in question. It also seems to contradict earlier rosier statements. Investors and watchdogs should have a few questions.

Amazon-Uber food fight means empty bellies for all

17 May 2019

The web giant is backing a $575 mln investment in Deliveroo, which ferries meals to time-poor urbanites. It means the UK-based group can continue its assault on rival Uber Eats in Europe. Thin margins and deep-pocketed investors are the perfect ingredients for perpetual losses.

Brooklyn rebuild embodies U.S. infrastructure woes

14 May 2019

The New York City borough’s iconic promenade needs repair. The metropolis’s belated plan to fix it is costly, myopic and far from transparent. With Infrastructure Week under way, it’s a timely tale showing why the nation’s waterways, roads and the like are in such a mess.

Nissan tough-guy defence looks shaky

14 May 2019

The Japanese car giant resisting a merger with Renault said operating profit fell 44% this year, and predicted more pain ahead. CEO Hiroto Saikawa says this is "rock bottom", but the dismal outlook might see shareholders warm to a deal, or demand new management.

Toyota and Honda may want to rev up in China

8 May 2019

The Corolla maker’s operating profit grew a mere 2.8 pct in its latest fiscal year. Toyota’s outlook is also modest while rival Honda cut sales forecasts across the board. The Chinese market, though struggling now, could yet provide some refuge from Donald Trump’s trade warpath.

VW’s reform drive needs more horsepower

2 May 2019

A year after taking the wheel, CEO Herbert Diess has canned a much-needed truck IPO and now expects 2019 operating profit will be at the lower end of his target range. The 82 billion euro carmaker won’t close the valuation gap with peers unless he gets the spinoff back on track.

Subsidies gas up turnaround at Buffett-backed BYD

29 April 2019

The Chinese electric vehicle maker reported a stupendous 632 pct increase in first-quarter net profit. Around half of the boost came from generous government grants, which may not be sustained. Even so, investors have cause for cautious celebration.

Renault M&A plan is lesser of two evils for Nissan

26 April 2019

The Gallic carmaker is once again pushing for closer integration with its partner, Nikkei says. If the Japanese company were to win concessions, such as board seat parity or an equal stake in a merged group, a deal would make more sense than the current mess.

Fiat Chrysler-Tesla emissions deal is a band-aid

8 April 2019

The Italian-American group will include Elon Musk’s electric cars in its fleet, dodging possible European carbon-dioxide fines. Tesla will welcome the cash but is no nearer to its sales target. And Fiat Chrysler still needs a partner to meet its long-term electric challenge.

Chinese Daimler raid is looking far from smart

28 March 2019

More than a year after acquiring almost 10 percent of the German carmaker, Zhejiang Geely Chairman Li Shufu has two small joint ventures to show for it including the latest to produce compact cars locally. He is known for taking a long view but meaningful cooperation looks hard.

VW’s shares are priced for EV self-destruction

22 February 2019

Likely cash flows to 2025 almost justify the carmaker’s 75 bln euro market value. Investors either think it’ll be worthless after then, or expect cratering combustion-engine sales and wasted investment in electric vehicles. Economies of scale mean that could be too pessimistic.

Brexit paints go-slower stripe on UK car industry

19 February 2019

Plant closures like Honda’s in Swindon raise the spectre of decline for Britain’s auto sector. Yet the underperforming site always looked vulnerable. The bigger test is whether global carmakers want to build electric vehicles in the UK. Brexit will prove a huge deterrent.

Just Eat could prove a tasty M&A morsel

11 February 2019

The 4.9 bln pound UK food-delivery group is leaderless and faces an activist investor. It could keep investing in its delivery services to fend off Uber, but peers like Takeaway.com and Delivery Hero are doing the same. Just Eat’s cut-price valuation could force the board’s hand.