The Zacks Analyst Blog Highlights: Ford Motor, Volkswagen, General Motors, Royal Dutch Shell and Schlumberger

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Aug 30, 2012, 09:30 ET

CHICAGO, Aug. 30, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Ford Motor Co. (NYSE:F), Volkswagen AG (OTC:VLKAY), General Motors (NYSE:GM), Royal Dutch Shell plc (NYSE:RDS.A) and Schlumberger Company (NYSE:SLB).

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Here are highlights from Wednesday's Analyst Blog:

Ford Adding 2 New Plants in China

Ford Motor Co. (NYSE:F) broke ground for two new plants in China as part of its major expansion plan to boost sales in the world's largest auto market. The company announced plans to invest $600 million and $760 million in its two new assembly plants, located in the southwestern city of Chongqing and in Hangzhou, respectively.

The $600 million plant will be the second assembly plant in Chongqing after the one opened in February this year that began producing the Ford Focus. It will also be the company's third assembly plant in China, including the one in Nanjing, China, both operated by Changan Ford Mazda Automobile (CFMA) joint venture.

The new Chongqing plant will have the annual production capacity of 250,000 vehicles after it is completed in 2014. It will manufacture Ford's 2.0-liter EcoBoost turbocharged engines. With the opening of the plant, Chongqing will become the largest manufacturing base for Ford outside Michigan.

The Hangzhou plant will be opened by CFMA, bringing Ford's total investment in China to nearly $4.9 billion since 2006. The plant, which is expected to roll out its first vehicle in 2015, will double production capacity in China to 1.2 million passenger cars annually.

Ford has embarked upon an aggressive expansion plan in China that includes plans to triple its lineup in China by introducing 15 models, including the Kuga small sport utility vehicle by 2015. Currently, the company sells seven models in the country.

In order to develop the new models, Ford will build new plants, raising its capital spending to about $6 billion annually by mid-decade from $4.3 billion in 2011. In order to keep pace with the expansion, Ford also plans to double its workforce by hiring 1,200 employees by 2015.

Ford anticipates global sales to expand by 50% to 8 million vehicles by 2015 given the potential growth in Asia, mainly China and India; and rising demand for small cars. The automaker anticipates small cars to account for 55% of the total sales by 2020 compared with 48% presently. One third of the small car sales are expected to come from Asia.

Recently, Ford announced that it has received regulatory approval from China's National Development and Reform Commission to split their CFMA joint venture into two. However, the plan is yet to be approved by the Ministry of Commerce.

Ford owns a 35% stake in Changan Ford Mazda, with Changan holding 50% and Mazda the remaining 15%. After the split, the two joint ventures, Changan Ford Automobile and Changan Mazda Automobile will own and operate Chongqing and Nanjing operations, respectively. Changan Ford Automobile will be controlled by Ford and Changan and Changan Mazda Automobile by Mazda and Changan.

Ford has been gearing to catch-up with its rivals in the world largest auto market. Last year, Ford occupied 2.5% market share in China, lagging Volkswagen AG (OTC:VLKAY) of 18% and General Motors (NYSE:GM) of 10%, according to U.K.-based automotive think tank LMC Automotive.

Shell-Schlumberger Unit Inks Deal

A/S Norske Shell, an affiliate of Royal Dutch Shell plc (NYSE:RDS.A), awarded a subsea equipment supply contract to Framo Engineering, a subsidiary of Houston, Texas-based Schlumberger Company (NYSE:SLB). The system will be utilized for the development of the Draugen Field in Norway.

Per the deal, the scope of the contract, worth $100 million, involves delivery of a complete system for topside power and control, the power and control umbilical, as well as the complete subsea pump module and manifold.

Designed and targeted to enhance the oil production in the Draugen Field, the subsea multiphase booster pump system will be installed at a water depth of 820.2 feet.

Framo will assemble and test the subsea multiphase booster pump system at its advanced facility in Hosoey, Norway. Field installation is expected to take place in the summer of 2014.

Both the companies remain highly upbeat about this collaboration. With an efficient manpower and strong technological base, Framo remains confident of executing the contract effectively and on schedule.

Based in the Netherlands, Shell owns a strong and diversified portfolio of global energy businesses that offer attractive long-term growth opportunities. The group's strong inventory of development projects and increased capital expenditures should help volume growth in the long run.

Schlumberger -- a leading oilfield services company -- provides technology, project management and information services to the global oil and gas industry. The company is favorably positioned to operate within the current oilfield services scenario, given acceleration in international drilling activity, pricing improvements and an expected recovery in its seismic operations.

Both Shell and Schlumberger currently hold a Zacks #3 Rank, implying a short-term Hold rating for a period of one to three months. We also maintain our long-term Neutral recommendation on the stocks

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