Joy Global Inc. (JOYG) has purchased approximately 136.5 million shares of International Mining Machinery Holdings Ltd. (‘’IMM’’) in the open market at a price of HKD 8.00 per share. The number of shares bought represents 10.5% of the total shares outstanding.
IMM is a leading designer and manufacturer of underground longwall coal mining equipment in China. It has strong domestic market positions in roadheaders and longwall shearing machines.
Recently, in July 2011, Joy Global has entered into an agreement with TJCC Holdings Limited (‘‘TJCC’’) to purchase 534.8 million shares of IMM representing 41.1% of the shares outstanding. Together with the latest open market purchase, Joy Global’s stake in IMM aggregates to 51.6% of shares outstanding.
However, the purchase of shares from TJCC is subject to approval from the Anti-monopoly Bureau of the Ministry of Commerce (“MOFCOM”) of the People’s Republic of China as well as satisfaction of other customary closing conditions.
Joy Global is positioned to relocate production capacity to low-cost regions like China, Poland and South Africa. The coal market in China is large and diverse and requires a multi-dimensional strategy.
Additionally, leadership in the Chinese market requires strong positions specific to each segment. IMM being an established market leader in the Chinese market with its premier products will help Joy Global in procuring leading positions in each of the major segments of the market.
The company presently retains a short-term Zacks #1 Rank (Strong Buy) that corresponds with our long-term Outperform recommendation on the stock.
On August 31, 2011, the company is expected to release its third quarter 2011 numbers. The Zacks Consensus Estimates for third quarter 2011 and fiscal year 2011 are currently at $1.52 per share and $5.77 per share, respectively.
Caterpillar Inc. (CAT) has recently concluded its huge $8.8 billion (including debt) buyout of Bucyrus International Inc. The company posted a robust 44% increase in profit to reach $1.02 in the second quarter of the year. However, it failed to meet the optimistic Zacks Consensus Estimate of $1.77 per share.
Based in Milwaukee, Wisconsin, Joy Global Inc. manufactures surface and underground mining equipment for extraction of coal, copper, iron ore, oil sands, gold and other mineral resources. It also offers a wide range of value-added aftermarket services aimed at enhancing reliability and optimizing the work-life of machinery. It has equipment manufacturing or sales and services facilities in more than 20 countries including the U.S., Canada, Brazil, Chile, South Africa, England, Poland, Russia, India and China.
