What effective control over KION could mean for Weichai Power

Will net profit get a boost?

According to Barclays, Weichai Power has become the largest shareholder of KION through Weichai Lux with stake of 33.3% after Superlift, the former largest shareholder, completes its disposal of circa 7.6% of shares of KION 12-Jun 2014. 

Here's more from Barclays:

After the disposal, Superlift’s stake in KION will have dropped from circa 34.5% to 26.9%. Weichai Power will have control over approximately 60.2% of the voting rights, which results in effective control over KION as under the voting arrangements contained in the KION Shareholders’ Agreement, Superlift will vote at KION's general meetings in accordance with Weichai Lux's voting decision in respect of important decisions.

Neutral impact with gross profit margin helped but net profit remains unchanged

Weichai Power’s financial statements will be affected accordingly as accounting treatment on KION will be changed from the equity method to the consolidated method after the disposal of shares from Superlift. We estimate that our FY14E gross margin for Weichai Power will be slightly increased from 20.2% to 23.1% on a pro forma basis, taking FY14 Bloomberg consensus estimates on KION of €4.50bn in revenue and €1.25bn in gross profit into account. The bottom line should hardly be affected as there is no change in Weichai Power's actual stake in KION.

Superlift, a company wholly owned by funds, has already reduced its stake in KION by 10.7mn shares in Jan 2014. We believe there will be no material impact on the operating level for either company as Weichai was already the largest strategic shareholder in KION. Thus, we believe the impact for Weichai Power becoming the largest shareholder of KION is neutral.