Daimler Truck Holding AG: Mediocre Returns Are All That Investors Should Expect

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The commercial vehicle market is mature, and won't grow faster than Real GDP.Although it is a market leader, Daimler Truck Holding AG's profitability and ROE lag behind its competitors, and it will ...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDaimler Truck Holding AG: Mediocre Returns Are All That Investors Should Expect\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-05-01 19:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4687905-daimler-truck-holding-ag-mediocre-returns-are-all-that-investors-should-expect><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The commercial vehicle market is mature, and won't grow faster than Real GDP.Although it is a market leader, Daimler Truck Holding AG's profitability and ROE lag behind its competitors, and it will ...</p>\n\n<a href=\"https://seekingalpha.com/article/4687905-daimler-truck-holding-ag-mediocre-returns-are-all-that-investors-should-expect\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4550","symbol_name":"红杉资本持仓","start_time":0,"source_url":"https://seekingalpha.com/article/4687905-daimler-truck-holding-ag-mediocre-returns-are-all-that-investors-should-expect","article_id":"2432524755","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/512137093/image_512137093.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2432524755","pubTimestamp":1714561201,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"The commercial vehicle market is mature, and won't grow faster than Real GDP.Although it is a market leader, Daimler Truck Holding AG's profitability and ROE lag behind its competitors, and it will li","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4550":"红杉资本持仓","BK4588":"碎股","FWD":"AB DISRUPTORS ETF","BK7014":"住宅建筑","TM":"丰田汽车","03160":"华夏日股对冲","PCAR":"帕卡","BK4099":"汽车制造商","FWD.AU":"FLEETWOOD LTD","DTRUY":"DAIMLER TRUCK HLDG AG","ISBC":"投资者银行","AG":"First Majestic Silver Corporation","BK4585":"ETF&股票定投概念","BK4555":"新能源车","MBGYY":"Mercedes Benz Group AG","BK4211":"区域性银行","BK4149":"建筑机械与重型卡车","BK4210":"白银","LU1571399168.USD":"ALLSPRING GLOBAL LONG/SHORT EQUITY \"IP\" (USD) ACC"},"translate_title":"戴姆勒卡车控股公司：平庸的回报是投资者应该期待的","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AG":1,"PCAR":1,"MBGYY":1,"ISBC":1,"FWD.AU":1,"FWD":1,"DTRUY":1,"TM":0.9,"03160":0.6},"content_text":"The commercial vehicle market is mature, and won't grow faster than Real GDP.Although it is a market leader, Daimler Truck Holding AG's profitability and ROE lag behind its competitors, and it will likely continue to do so.Like all commercial manufacturers, Daimler must make major investments to transition from fossil fuels to greener forms of power.Daimler's strategy of entering into JVs both reduces risk and the amount of capital it must invest, but it also reduces product differentiation, and exposes it to potential price competition and lower margins in the future.Given that moving goods is a core function of any economy, Daimler Truck warrants a rating of Hold, but it is not a Buy.   Monty Rakusen/DigitalVision via Getty ImagesThere are few, if any, words that bring German industry to mind more than the name of Daimler. Carl Friedrich Benz designed the Benz Patent Motorcar, the first practical modern automobile put into series production in 1885. The company he founded, Benz cie, was the oldest car company in the world until it merged with Daimler Motoren Gesellschaft in 1926. North Americans are perhaps more familiar with one of its business units, Mercedes-Benz, which was named after cars that were first designed by Emil Jellinek. Jellinek named his cars after his daughter Mercedes, which is a Spanish name derived from the word for mercy. In 2007, the company shed the name DaimlerChrysler and was re-named Daimler AG, the name it had until 2021, when the company announced plans to rename itself Mercedes-Benz (OTCPK:MBGYY) and to spin off its heavy commercial truck unit. Daimler Truck Holding AG (OTCPK:DTRUY) was listed on the Frankfurt Exchange, and its first day of trading was December 10, 2021. Since that time, it has outperformed both the Dax and the S&P 500. Data by YChartsThe bulk of this outperformance occurred over the past 12 months when Daimler's Shares rose by 38%. However, recent weakness over the past month has meant that Daimler's shares have given 10% back to the market. I. An Overview of Commercial Vehicles Different countries have different classification schemes for commercial vehicles, and in the USA, definitions can vary between different states. Factors such as private versus commercial ownership, the weight of the vehicle, the number of passengers carried for compensation (8 in the USA and 9 in the EU) and the types of material being transported (i.e. if the material is hazardous) are all considered. Table 1 shows how the United States Federal Department of Transportation classifies commercial vehicles by weight, and to the right of it are several pictures taken from Daimler's 2023 Annual Report of vehicles in different weight classes that it offers under three of its nine brands. Table 1: Commercial Truck Classification in the United States US Ministry of Transportation and Daimler Truck's 2023 Annual ReportII. The Global Commercial Vehicle Market 1) Market Size Commercial vehicles are a mature product that have historically grown in line with Real GDP. Between 2013 and 2022, Real Global GDP, which strips out the effects of inflation, grew at an annual rate of 2.67%. This compares to a CAGR of 3.3% for the number of heavy buses, light commercial vehicles, and trucks that were produced worldwide between 2016 and 2019 - from 22.67 million vehicles in 2016 to 25.01 vehicles in 2019. Due to the Covid-19 Pandemic, global production fell to 21.8 million units in 2020, but it has largely rebounded with 23.7 million units being produced in 2022, and forecast sales for 2024 being 24.27 million units. Forecasts for growth range from an anemic -0.54% between 2024 and 2029 in terms of unit sales, to optimistic projections of a CAGR of 9.4% for revenue, from $122.47 billion in 2023 to $269.85 billion by 2030. It should be noted that this latter forecast is in terms of nominal dollars, so depending on what your crystal ball tells you the average rate of inflation will be over the next five or six years, you can net 2% to 5% off of this 9.4% growth rate to arrive at a real rate of growth. My own view is that, as has been the case in the past, it's difficult to see the demand for heavy-duty trucks growing faster than the growth rate of the goods being produced that they are needed to move, unless the trucking industry is able to take share from other forms of transport such as air, rail, and in places like the Great Lakes, marine. The same is true in monetary terms - unless the cost of moving goods by competing methods, such as rail, in particular, rises materially, it is difficult to see how the trucking industry will enjoy the pricing power needed to increase the prices that they charge their customers by an amount that is substantially greater than the rate of inflation. Similar arguments can be made for the growth rate of buses. It's hard to see how demand for buses will grow at a faster rate than the population as a whole, or Real GDP, especially when considered in light of trends such as work from home, an aging population that won't be commuting, and increased alternate forms of transport such as Light Rail and Subways. 2) Market Segmentation There are a number of ways that the Commercial Vehicle Market can be divided. The charts below are sourced from this report produced by Precedence Research. Chart 1* - Geographic Breakdown of the Commercial Vehicle Market    Precedence Research* LAMEA is short for Latin America Middle East and Africa The consensus view of analysts' forecasts that I have read are that over the next decade, the Asian Pacific market will experience that fastest rate of growth in both GDP and in the demand for commercial vehicles, in part due to the forecasted rapid development of infrastructure in this region. However, North America will continue to be the world's largest market for commercial vehicles. Chart 2 - Commercial Vehicles Market Share By Product Type   Precedence ResearchMy own view is that of these three segments, buses and coaches will grow at the slowest rate due to an aging population that doesn't commute, secular trends such as remote working, and in the developing world, the development of infrastructure such as light rail and subways. There doesn't appear to be a consensus view for which of the two remaining segments will experience the fastest rate of growth. Some forecasters believe that heavy investment by OEM's (Original Engine Manufacturers) in BEV and Fuel Cell technology will lead to a faster than usual fleet replacement of vehicles. Other forecasters think that the same factors are present for light commercial vehicles, and that the continued growth of shopping via the internet will be an additional spur for the demand of LCVs such as delivery vans. Chart 3 - Commercial Vehicle Market Revenue By Power Source, USD Billions, Recent Trends* Precedence Research* Precedence Research The segments above can be aggregated into two Macro segments. the first is Fossil Fuel Power Sources, which consist of Gasoline, Diesel, and LPG & Natural Gas Engines. The second Macro segment is Green Power Sources, which are HEV / PEV, BEV, and Fuel Cell Vehicles. Diesel dominates as a source of power because, being as heavy as they are, commercial vehicles need a lot of power, and diesel produces the most torque in an engine. However, diesel is also the dirtiest source of power because despite technological advances, diesel engines emit more harmful particulate matter than other forms of fossil fuel. At the other end of the fossil fuel spectrum is Natural Gas, which is the cheapest and cleanest fossil fuel. Due to a variety of factors such as government regulation and subsidies, Green methods of propulsions are growing at a faster rate than fossil fuels. As a result, the size of both the BEV and Hybrid / Plug In Electric Vehicle segments has surpassed the size of the LPG & Natural Gas Segment, and this trend is expected to continue. III. Daimler's Global Reach Daimler Truck sells its products in 160 countries. It is a market leader in North America, where through its Freightliner brand, it has a market share for semi trucks of approximately 40%, and where it also ranks second in the vocational and construction vehicle segment. In its home market of the EU30, its Mercedes-Benz line, with a 19% share of the market, is the top selling brand for all commercial vehicles. Daimler has had significant operations in Japan since 2003, when it purchased a controlling stake in Mitsubishi Fuso, a spin-off of Mitsubishi Motor Corporation's Truck and Bus division. In 2011, Daimler increased its stake in Mitsubishi Fuso to 90% of the company. In May of 2023, Fuso, Daimler, Toyota and Hino, a commercial vehicle manufacturer controlled by Toyota, announced that they planned to set up a new holding company by the end of 2024 that would be equally owned by both Toyota and Daimler. The new entity will initially collaborate on the development of zero emissions technology and global procurement, and it is envisaged that eventually Hino and Fuso will fully merge. As well as its strong market position in Japan, Fuso also has a strong market position in Indonesia. However, Daimler is a bit player in many other Asian markets. For example, in India, Daimler Commercial India Vehicles (DCIV) manufactures and sells vehicles under the BharatBenz marque. Unfortunately for Daimler, deep pocketed local competitors such as Tata, Ashok Leyland, and Mahindra & Mahindra have relegated it to 8th place, with a market share that fluctuates between five and ten percent. Daimler is also struggling to gain traction in the highly competitive Chinese market. IV. Daimler's Recent Results In 2023, Daimler sold 526,053 units globally, up 1% from 2022. Despite the fact that sales were flat, revenue increased by 10%, from EUR 50.95 billion in 2022 to EUR 56.89 billion in 2023. It should be noted that a large portion of this increase was due to the elevated levels of inflation experienced globally during 2022. In terms of profitability, however, 2023 was an exceptional year for Daimler, even after factoring in inflation. - EBIT increased by 48%, to EUR 5.183 billion - Net Profit increased by 44%, to EUR 3.971 billion - EPS increased by 43%, to EUR 4.62 - Free Cash Flow increased by 61%, to EUR 2.811 billion - Stripping out the results of Daimler's Financial Service unit, where ROE decreased from 15.9% to 8%, Daimler's Industrial businesses saw their Return on Sales increase from 10.8% to 12.3%. Chart 4 is taken from Daimler's 2023 Annual Report, and it shows Daimler's performance in its three main geographic markets. For clarification, as well as the EU30, the Mercedes-Benz Unit also includes the Middle East and Africa, as well as several South American markets. It should also be noted that Daimler has two additional business units not depicted, which are Financial Services and Daimler Buses. Financial Services had revenue of EUR 2.674 billion in 2023, or 4.7% of Daimler's overall revenue, and Daimler Buses had revenue of EUR 4.566 billion, or 8% of total revenue. Chart 4: Daimler Truck - 2023 Financial Results By Geographic Location Daimler Truck 2023 Annual ReportSeveral things from 2023's results stand out. First, North America is Daimler's largest market, in terms of Unit Sales, Revenue, and EBIT. It also has the highest margins, with a Return on Sales of 12.3% versus 9.4% in Europe, and 4.7% in Asia. Second, although Unit Sales in Asia are greater than in Europe (161,171 units versus 158,511 units), Asia's revenue is 67% less than Europe's. This indicates that Daimler has a different product mix in Asia compared to the rest of the world, with lower priced Light Commercial Vehicles comprising a greater proportion of the vehicles sold in this region. V. Daimler's Movement Away From Fossil Fuels And Its Efforts In Self Driving Vehicles Daimler's sales of zero emission vehicles increased by 277% in 2023 when compared to 2022. However, this increase is not as impressive as it first seems, due to the low base which it started from. In absolute terms, Daimler's total sales of zero emission vehicles produced revenue of EUR 3.443 billion in 2023, or 0.65% of total revenue. Daimler has been active in the development of hydrogen fuel cells since 1997 and its Mercedes-Benz GenH2 truck is capable of towing a 40 ton load more than 1,000 kilometres, so it is likely that a significant proportion of its zero emission sales were powered by this technology. Daimler is also making strides in the BEV Space, and it now offers 10 BEV Vehicles, mainly in the LCV segments. In the long haul transport market, Daimler plans to introduce the Mercedes-Benz eActros 600 this year. Most notable, however, is Daimler's launch in April 2023 of Rizon, a new electric truck brand. Rizon will initially offer three models of Class 4 / 5 trucks with a range of 75 to 160 miles. Its target markets are urban retail logistics / last-mile delivery businesses, and the municipal works departments of local governments. As well as its JV with Toyota, Daimler Truck has also entered into several notable Joint Ventures in North America.   Greenlane is a $650 million Joint Venture between BlackRock, NextEra Energy, and Daimler Trucks North America, that aims to build a nationwide network of battery charging and hydrogen feeling stations. Plans for its flagship corridor, a 280-mile route between Los Angeles and Las Vegas, were announced in March 2024 and its next two corridors will be in the Texas Triangle and the Northeastern United States. Daimler has also entered into a Joint Venture with two of its major competitors to produce batteries for BEVs manufactured in the United States. It was announced in September 2023 that Daimler North America, PACCAR Inc. (PCAR), the manufacturer of Peterbilt and Kenworth Trucks, and Accelerate (the clean energy arm of Cummins Inc. or CMI) would form a Joint venture to manufacture batteries for the North American commercial vehicle market. Each company will 30% of the Joint Venture, and Eve Energy, a leader in the manufacture of lithium iron phosphate (LFP) batteries will own the remaining 10 percent. Plans are well underway, and in January of this year, it was announced that a 21 GWh factory will be built in Mississippi, with a 2027 target set for the start of production.  The following should be noted about these various Joint Ventures. First, Greenlane will not act as a moat for Daimler. European regulators forced Tesla to open its charging networks to other brands, and Elon Musk wisely concluded that the same would be true in the US, so he took this step voluntarily. And indeed, this is a requirement for funding grants under the Inflation Reduction Act. Moreover, according to NACS, there are more than 145,000 fueling stations in the USA. They occupy prime positions accessible to transportation links and 64% of these are independently operated. Many will be converted to charging stations, or dual fossil fuel / charging stations. Finally, there will be other entrants into this space, such as the Italian energy giant Enel, which wants to deploy 2 million chargers in the U.S. by 2030. Second, JVs are a good way to spread the cost of R&D. However, they also prevent Daimler (and its JV partners) from developing a competitive advantage. Finally, while these JVs also spread the capital costs of new infrastructure, they also reduce product differentiation. In short, if every car in the world had a Ferrari engine, then Ferrari cars would no longer be special. If every electric truck has the same battery at its heart, and access to the same charging stations, then price will be the main metric upon which companies will compete. VI. How Daimler's Performance Compares To Its Competitors As per the introduction of this article, Daimler's shares have outperformed both the Dax and the S&P 500 since the company was formed in December 2021. Here is how its shares have performed compared to several competitors and companies in its industry segment. Data by YChartsDaimler Trucks has substantially underperformed its peers, and one must ask whether this underperformance will continue, or if there will be a reversion to the mean, and the performance of its shares will catch up to the performance of its competitors. In my opinion, Daimler's underperformance has been justified, and it will continue to underperform operationally due to the reasons listed below. However, I also think that this future operational underperformance has been priced into the shares, and that they represent fair value. 1) Daimler is not as profitable as its competitors. Table 2 - Select Measures of Profitability     VOLAF PCAR CMI DTRUY WAB   Gross Profit Margin 26.52% 19.82% 24.22% 20.71% 31.40%   EBIT Margin 14.66% 17.20% 10.12% 9.66% 14.60%   EBITDA Margin 15.81% 18.44% 13.10% 11.13% 19.37%   Net Income Margin 9.23% 13.10% 2.16% 6.75% 9.20%   Levered FCF Margin 10.22% 13.49% 12.24% 2.72% 10.23%   Return on Equity 29.84% 31.68% 8.35% 18.54% 9.00%   Click to enlarge Daimler's margins rank last or second to last when compared to its peers in every measure of profitability. In terms of ROE, Daimler outperforms suppliers such as Westinghouse Airbrakes, and Cummings, a manufacturer of engines. However, it badly underperforms direct competitors such as AB Volvo and PACCAR Inc. on this metric. As mentioned above, at 40%, Daimler has the largest share for Heavy Vehicles in North America versus its nearest competitor, PACCAR (30%) and AB Volvo, which has a 17% share of the market. Daimler is also the leading commercial vehicle manufacturer in Europe with a 19% share of the market, versus AB Volvo (18.2%), DAF Trucks N.V, (17%) and PACCAR (15%). The biggest difference between all of these companies is that Daimler Truck has a substantial amount of capital invested in Asia, whereas the others don't. Manufacturing trucks is capital intensive and it has large fixed costs. As can be seen in Chart 4, Daimler makes more vehicles in Asia than it does in its home market of Europe, and its Asian production is 82% of its North American volume. The huge capital investment needed to support this production volume results in revenue that is less than two thirds of the revenue Daimler earns in its other markets. Further, its Asian business has much lower margins; 4.7% versus 10.2% in Europe, and 12.3% in North America. Perhaps Daimler believes that this drag on equity and profitability is warranted by Asia's superior growth prospects. However, outside of Japan, where it is entering into a JV with Toyota, it is hard to see it having enough scale to take advantage of this forecast growth. 2) Daimler's sales haven't grown as fast as its competitors, and this expected to continue. Chart 3 - Historic and Forecast* Revenue Growth     VOLAF PCAR CMI DTRUY WAB   Revenue Growth (YoY) 10.65% 21.89% 21.34% 9.71% 15.66%   Revenue Growth (FWD) 2.56% 7.17% 7.22% 4.43% 9.20%   Click to enlarge * Source: Seeking Alpha Daimler is the only company in Chart 3 that had a single digit rate of growth from 2022 to 2023, and as is the case for the industry as a whole, the growth in revenue is forecast to decrease markedly. 3) The market may be penalizing Daimler Truck for its ownership structure. The concept of a control premium has long been understood. Indeed, in 1998, Daimler AG merged with Chrysler, in a deal that was described at the time as a merger of equals. Several years later, the Chairman of Daimler AG was interviewed by the Financial Times, where he stated that \"he had intended all along to relegate Chrysler to a division. He added that he had called the combination a 'merger of equals' for 'psychological' reasons. If I had gone out and said, 'Look, eventually Chrysler will be a division of the DaimlerChrysler Group,' everybody would have said, 'No way will we do a deal like that,' he said, comparing himself to a chess player keeping his next move secret.\" Kirk Kerkorian, Chrysler's largest shareholder at the time of the merger, promptly sued Daimler AG for fraud, arguing that he had agreed to a merger of equals, and had he known that it was, in fact, a corporate takeover, he would have demanded that Daimler AG pay a control premium. Kerkorian ultimately lost his suit because the court ruled that he was a sophisticated investor who had agreed to the deal before the documents describing it as a merger of equals were prepared. However, Daimler later agreed to a $300 million settlement for a class action suit brought by retail investors on the same grounds. In short, if there is a premium that makes one investor's shares more valuable than those of other investors, that value must come from the disadvantaged class, whose shares are discounted accordingly. Such a situation currently exists with Daimler Trucks because 30% of its shares are owned by Mercedes-Benz Group AG (OTCPK:MBGYY), with a further 4.98% owned by Mercedes-Benz's pension plan. Given that both companies are in the automotive industry, it isn't too hard to imagine scenarios where Mercedes-Benz influences Daimler Trucks to act in a manner which benefits Mercedes, to the detriment of Daimler. Daimler Truck Holding A.G. may also be exposed to political risk in a way that PACCAR, DAF Trucks N.V. and AB Volvo aren't. As mentioned, 30% of Daimler's shares are owned by Mercedes-Benz Group AG. The following pie chart that outlines the ownership of Mercedes-Benz is taken from its annual report. Chart 4 - Ownership of Mercedes-Benz   Mercedes-Benz 2023 Annual ReportBAIC Group, or the Beijing Hainachuan Automotive Parts, is a large Chinese automobile manufacturer that is, according to its website, an \"enterprise group ranked 193rd among the world's top 500.\" It is also wholly owned by the city of Beijing. Tenacious3 Prospect Investment Limited is the investment vehicle of Li Shu Fu, who, according to Forbes, is the 9th richest man in China. Li Shu Fu is also the founder and chairman of Geely Auto, the sixth largest automobile manufacturer in China. There are very few things that Republicans and Democrats in Washington agree upon. Kissing babies can help you get elected is one of these things, the Star Spangled Banner has three colours is another, and the third thing is that it is time to crack down on China. The EU has also come to this conclusion, and it has recently instigated a probe into the unfair subsidization of Chinese EV Manufacturers. Given that the two largest owners of Daimler's largest shareholder are Chinese EV Manufacturers, with one of these shareholders having close links to the Chinese Communist Party, it is not hard to see how political blowback against Mercedes-Benz could spill over to Daimler Truck. While this risk is not quantifiable and should not be overstated, it is still a risk that Daimler faces that its competitors do not. VII. Conclusion Daimler Truck is one of the largest manufacturers of commercial vehicles in the world. The market for its products is mature, and at best, grows in line with Real GDP. Since its inception, Daimler's shares have outperformed the wider market, especially over the past 12 months, but underperformed the shares of its peers. This can be explained, in part, by the drag that Daimler's Asian business has upon its overall profitability and Return on Equity. A contributing factor may also be the large 30% stake in Daimler that Mercedes-Benz owns. Government regulations that require all commercial vehicles to be CO2 neutral in the next two decades mean that Daimler, like all commercial vehicle manufacturers, must make significant R&D and infrastructure investments. Daimler has responded to this challenge by entering into a number of Joint Ventures. While this reduces the risk to Daimler, it also has the effect of eliminating sources of competitive advantage, and reducing product differentiation. This has the potential to lead to intense price competition and lower margins in the future. Finally, any trade war between the US or EU and China will likely affect Daimler more than its competitors. The movement of goods is a core function of any economy, and Daimler is the number one player in the world's two largest markets, the EU and the USA. It is hard to see this leadership position being eroded in the near to medium term, so Daimler can be expected to earn long-term returns in line with the overall stock market. It therefore warrants a rating of HOLD, but due to the factors listed above, it is not a Buy.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. 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