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Cristina Tov

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  • Boeing: Getting Stronger With 737 Aircraft [View article]
    Boeing 737 family aircraft contributed nearly 79% of its total orders in 2013 and has a backlog of around 3,675 Boeing 737 aircraft as of January 2014. The company is planning to raise the production of its 737 aircraft from the current rate 38 aircraft a month to 42 aircraft per month from first half of 2014. This increase in the production rate will enable the company to speed-up the deliveries of its 737 aircraft, which will strengthen its future revenue stream. That's the reason I wrote that it will enhance its topline.

    Boeing is expanding its current Helena and South Carolina facilities. In September 2013 announced that it will expand the Helena facility by around 55,000 square feet and bring the manufacturing facility to 167,099 square feet. The will be completed by the fourth quarter of 2014, and the production from this facility to begin in early 2015.This facility produces parts and assemblies for its 737, 747, 767 and 787 aircraft models and expansion will support Boeing in achieving its plan for increasing the production rate.

    The expansion of its South Carolina facility is expected to be completed by mid-2016, which will support Boeing to increase the production rate of its 787 Dreamliner. The 787 is currently assembled at this facility and then flown to Fort Worth, Texas, for painting before being flown back to South Carolina for delivery. Expansion of Carolina facility will enable to paint fully assembled 787s aircraft and avoid unnecessary delay in delivering these aircraft to the customers.

    Boeing has achieved the production rate of 10 aircraft per month, which is the highest ever for a twin-aisle airplane. The 787 program has now increased its production rate three times in just over a year, including to five airplanes per month in November 2012 and seven per month in May 2013.

    Boeing in March 2013, won a U.S. appeals court ruling affirming the dismissal of an investor lawsuit accusing the company officials of making misleading public statements about the readiness of its 787 “Dreamliner” aircraft.

    The Boeing 737 Next-Generation aircrafts includes 737-600, 737-700, 737-800, and 737-900ER. Its 737-700 received type certification from the FAA in November 1997. The certification formally recognizes that the newest 737 airplane has passed all the stringent testing requirements mandated by the FAA and is ready to enter passenger service. The second model, the 737-800, was launched September 5, 1994, and received FAA certification March 13, 1998. Receiving the FAA certification is the regulatory process, which took around 18 months to 24 months, its 737-900ER received the FAA certification in April 2007, for which it took less than 24 months from its launch.

    Talking about 737 Max, development cost could be twice of A320neo; however the price of Boeing “737 MAX 8” is almost comparable to Airbus A320neo, as Boeing 737 MAX 8 is priced at $103.7 million while Airbus A320neo is priced at $100.2 million. Also, Boeing 737-MAX 8 is expected to provide the lowest operating costs in the single-aisle segment to the airline operators with an 8% per-seat advantage over the A320neo.

    Development of the 737 MAX is on schedule with firm configuration of the airplane achieved in July 2013. Boeing 737-MAX first flight is scheduled in 2016 with deliveries to customers beginning in 2017. It has already received around 1,763 orders.
    Feb 22 08:32 AM | Likes Like |Link to Comment
  • Mosaic: Betting On Phosphate [View article]
    Mosaic entered into joint venture with Saudi Arabian Mining Company (Ma'aden) and Saudi Basic Industries Corporation (SABIC). In this venture, Mosaic holds 25% in Saudi operations while Ma'aden and SABIC holds 60% and 15% respectively. The companies will develop a phosphate mine and chemical complexes that will produce fertilizers, animal feed and food grade purified phosphoric acid and the operations are expected to commence in 2016.
    The deal with Ma'aden will be beneficial for Mosaic, as Ma’aden is the lowest cost producer of Diammonium Phosphate (DAP), the product preferred by most of the Indian farmers. This venture will help Mosaic to quickly serve the growing demands from the countries like India and China with lower cost of sales. Further, shipping phosphate fertilizer from Saudi Arabia to these countries will be cheaper than shipping phosphate from its Florida facility, as Mosaic already has a vast network of terminals, inland distribution points and infrastructure especially in India. At present it is not possible to calculate its exact future cost of sales, however it is estimated this venture could lower the Mosaic's cost of sales by around $50 per ton.
    Feb 17 12:10 PM | Likes Like |Link to Comment
  • Barrick Gold: Tough Times Ahead [View article]
    Yes, Barrick Gold operates at lower costs as compared to its peers. The company provides a better investment opportunity on the basis of forward price-to-earnings ratio and a dividend yield of 2.7%. However, the company's change in gold price assumption would render some of its projects uneconomical to mine, causing asset write-downs. This will affect the company's cash flows in the longer-term. Moreover, the company's debt-to-equity ratio of 1.1 is extremely high as compared to the industry's average of 0.4. Considering all these factors, it would be better to wait for the company's upcoming results (Feb 13, 2014), in order to have more clarity on impairments and debt position.
    Feb 7 11:29 AM | Likes Like |Link to Comment
  • DuPont Shifting Focus To High-Growth Segments [View article]
    DuPont is divesting the chemical units, as the revenue and earnings from these units are volatile and it is a low growth opportunity, and the company believes that this segment doesn't fit with its long term growth strategies. By selling its Glass Laminating Solutions/Vinyl”, or GLS/Vinyls business, the company is expected to generate around $543 million. As discussed in the article, this unit possess the low growth potential, as it is clearly visible by analyzing the deal value. The segment is valued at P/S multiple of 1.09 times, compared to DuPont overall P/S of 1.66 times.
    While, its Performance Chemical segment, which makes TiO2, reported significantly year-over-year operating earnings decline of around 51.25% from $1,578 million to $769 million in the first nine months of 2013. This spin-off decision will enable the company to hedge its earnings from the volatile earning of this segment and allow it to improve its earning margins and the shareholders' value.
    After evaluating the company's previous deal with The Carlyle Group, from which it used $1 billion for share buyback, along with reducing its debt burden. I expect the company may follow same strategy and use the funds to strengthen its financial position and its balance sheet. Further this divestitures and spin-off will allow DuPont to focus more on its agricultural segment, which is expected to have higher growth potential.
    Jan 23 09:38 AM | 1 Like Like |Link to Comment
  • Valero: A Growth Investment [View article]
    In the article I wanted to write thousand barrels per day only for MBPD but mistakenly wrote million for (M) while using the full form of abbreviation. As you mentioned that the total U.S production was 7.03 million barrels of crude oil per day, so no way it is possible for Valero to add up these much amount of crude oil refine projects. So it should be --Valero would add up additional 90 thousand barrels per day, or mbpd, and 70 mbpd with its additional projected units in Houston and Corpus Christi respectively by 2015.
    Jan 20 09:51 AM | Likes Like |Link to Comment
  • Valero: A Growth Investment [View article]
    Its EV/EBITDA multiple on a trailing twelve month basis is now at 6.15x, which is slightly higher than its peer Tesoro. Although it's maintaining higher level of capital expenditure, it has generated a positive cash flow in three quarters in 2013, and positive cash flow in trailing twelve months. That is definitely a good indicator for the investors as you mentioned.
    Jan 20 09:50 AM | Likes Like |Link to Comment
  • Valero: A Growth Investment [View article]
    According to the analysts estimation Valero’s price target is around $59. While for Tesoro Corp (TSO), analysts have set the target price of around $75 which is around 42% higher than the current stock price.
    Jan 20 09:50 AM | Likes Like |Link to Comment
  • Rio Tinto's Future Depends On Iron Ore Fate [View article]
    Kennecott Corp is one of the 92,125 beneficiaries of a 132-year-old federal mining law, under which government has given title to the land consisting of precious metals and minerals for less than $10 an acre. Kennecott acquired ownership of the land for about $2 per acre, and it has to pay fee of about $5 per acre yearly to maintain possession of the claim. However, it do not pay any royalty to the federal government for metals and minerals mined from this land.
    Gold, silver and other precious metals are by-products of the Kennecott's copper refining process. While refining copper, these metals are captured in electrolytic slime, and this slime is transferred to gold refinery, where gold is separated from other metals, and finally it is converted into 99.99% gold bars. Jewellery company Tiffany & Co is one of its customer which purchase around 5% of the gold mined. Moreover, in October last year, this gold refinery was awarded by “Chain-of-Custody” certification from the Responsible Jewellery Council (RJC) which means that refinery has applied appropriate standards to manage its gold supply chain in addition to standards for human rights, labor, environmental impact, and business ethics, as articulated in the RJC Code of Practices.
    Jan 16 12:02 PM | Likes Like |Link to Comment
  • Mosaic: Betting On Phosphate [View article]
    Decline in the phosphate price has significantly impacted the fertilizer companies. CF Industries has reported the year-over-year gross income decline of 55% in its phosphate segment to $73.2 million for the first nine months of 2013. The company has went up ahead to sell its phosphate business, which is expected by the end of first half of this year, this will help the company to focus on nitrogen segment.

    This acquisition transaction between CF and Mosaic has recently received the approval from the U.S. Department of Justice. However, the transaction still requires other regulatory approvals and any delays in the divestiture process may impact CF Industries earning in the upcoming quarters.
    Jan 16 12:00 PM | Likes Like |Link to Comment
  • Silver Wheaton: A Better Option Than Metal Miners? [View article]
    I calculated the internal rate of return at an assumed discount rate of 7%, which is the mid-point of the standard discount rate of 6%-8% used for metal projects. As mentioned in the article, all cash inflows were calculated using an average realized gold price of $1,200 per oz. and all cash outflows were calculated at the agreed price of $400 per oz. (with an inflationary adjustment of 1% beginning in the fourth year). Also, I assumed the company will make an upfront payment of $135 million in the first year.
    Jan 16 11:58 AM | Likes Like |Link to Comment
  • Silver Wheaton: A Better Option Than Metal Miners? [View article]
    I had recommended buying Silver Wheaton at its current level but with a long-term perspective. Even though the company’s business model is different, its stock price declined in line with other mining stocks in 2013, which has presented a good opportunity to make a long position in Silver Wheaton.
    Jan 16 11:58 AM | Likes Like |Link to Comment
  • Why You Should Consider Investing In Apache [View article]
    The 1.8 million boe should actually read as 1.8 billion boe. Apologies for the typo there. I will get that corrected asap
    Jan 13 07:56 AM | Likes Like |Link to Comment
  • Lockheed Martin: Growing With Its Aeronautics Segment [View article]
    Yes there are various ups and downs in the DoD budget. Talking about Boeing, it has diversified into the civilian sector to serve airline companies with its more fuel-efficient aircraft such 737, 787 Dreamliner and its new 777X. This has enabled it to build its order book stronger. It has recently dominated the Dubai Air Show and received the order worth $101.5 billion.
    On the other hand, Lockheed is mainly depending on the defense contracts. However, the company with its leading fighter jets F-22 and F-35, which are having superior stealth capabilities are expected to provide opportunities to LMT in future. As I mentioned in the article that the company apart from the U.S., has also received contracts with other countries including Australia, Canada, Denmark, Italy, Israel, Japan, the Netherlands, Norway, South Korea, Turkey, and Britain for these fighter jets. Looking at its strong base, I believe LMT also has good future growth prospects.
    Jan 2 10:26 AM | Likes Like |Link to Comment
  • Southern Copper Is Cheap At These Levels [View article]
    I do agree with the fact that, Southern Copper's dividend history has not been as stable as that of BHP Billiton. Also, Southern Copper's expansion plan will make it difficult for the company to increase its dividend payments in the coming years. As a dividend paying stock, BHP clearly appears to be better than Southern Copper.
    However, with copper demand expected to rise, I expect Southern Copper's pure-play copper business to drive its growth. As mentioned in the article, the company generated 78% of its total revenue from the copper business in the first nine months of this year. For BHP Billiton, copper's contribution to total revenue was 18% in fiscal year 2013. Moreover, Southern Copper's history of posting impressive profit margins makes me bullish on the company. Even if the company finds it difficult to pay regular dividends due to its expansion plan, I expect investors to benefit from long-term capital appreciation.
    Dec 17 04:43 AM | 1 Like Like |Link to Comment
  • Whole Foods Market: Countering Profitability Pressures [View article]

    As the demand for organic food products are increasing in the market, various retailers like Kroger and Target are also adopting strategies to satisfy their customers by offering products, which are in accordance with their needs. Target's P-Fresh segment offers organic foods. Along with this, prices of identical grocery items at Target stores are 14% lower than Whole Food, as I have mentioned in my article. Its P-Fresh segment and lower pricing (before Whole Food started providing discounts) makes me believe that Target is giving competition to Organic and natural food retailer.

    When it comes to Kroger as a competition to Whole Food Market, Kroger is investing in natural foods brand as their customers are demanding more non-GMO products. This has strengthened its Simple Truth organic brand, which offers natural products. With its investments, this brand is close to becoming $1 billion brand for Kroger, as said by the company's officials. Moreover, Kroger operates approximately 2,424 stores in comparison to Whole Food Market operating 367 stores. Because of its comparatively larger store base, I believe Kroger’s organic brand will expand its reach.
    Dec 10 03:26 AM | Likes Like |Link to Comment