Eaton Enters into Chinese JV - Analyst Blog
April 08 2011 - 1:04PM
Zacks
The industrial manufacturer Eaton Corporation
(ETN) expanded its Chinese footprint when it inked a joint venture
with Shanghai Aircraft Manufacturing Co. Ltd. ("SAMC"), a
subsidiary of Commercial Aircraft Corporation of China
("COMAC").
In this joint venture, formed to support COMAC's C919
single-aisle commercial aircraft program, Eaton will have a 49%
interest while its Chinese counterpart will hold the remaining
interest.
The joint venture will primarily focus on the design,
development, manufacturing and support of fuel and hydraulic
conveyance systems of the aircraft. The joint venture has also
plans to supply conveyance systems to other aircraft and engine
manufacturers in China and the rest of the world.
Eaton is the first foreign partner selected for the C919
program, the estimated value of which, including aftermarket
opportunities, is pegged at $1.8 billion, based on an anticipated
volume of 2,500 airplanes.
Eaton started working in China, from 1993, through a joint
venture in Jining, Shandong Province. Since then the company is
working relentlessly to expand its operation in that country.
The company's most recent acquisition, dating back to October
2010, was the purchase of the remaining 50% stake in Chloride
Phoenixtec Electronics, a China-based manufacturer of
uninterruptible power supply.
We believe Eaton's association with the C919 aircraft program is
beneficial for the company, as it presages a rapid development in
the Chinese aerospace industry. The venture would further boost the
company’s revenues from the Asia Pacific region. Eaton's Asia
Pacific sales grew 31.3% in 2010.
Eaton Corporation currently retains a Zacks #3 Rank (short-term
Hold rating). We maintain our long-term Neutral rating on the
stock. The company competes with ITT Corporation
(ITT) and Parker Hannifin Corporation (PH).
Cleveland, Ohio-based diversified power management company Eaton
Corporation is a leading supplier of power accessories in the
aerospace industry and has customers in 150 countries.
EATON CORP (ETN): Free Stock Analysis Report
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