• HOME
  • INVESTMENTS
    • Equities >
      • Australia All Cap
      • Australia Small Cap Income
      • Global Mobility
      • Global High Conviction
    • Property >
      • Listed Property
      • TAMIM Property
    • Income >
      • Credit
  • INSIGHTS
    • Insights
    • Weekly Reading Lists
  • ABOUT
  • CONTACT
Tamim Asset Management
  • HOME
  • INVESTMENTS
    • Equities >
      • Australia All Cap
      • Australia Small Cap Income
      • Global Mobility
      • Global High Conviction
    • Property >
      • Listed Property
      • TAMIM Property
    • Income >
      • Credit
  • INSIGHTS
    • Insights
    • Weekly Reading Lists
  • ABOUT
  • CONTACT

Stock Insights

5G, Autonomous Vehicles and How We're Taking Advantage: Part 2

29/6/2021

0 Comments

 
In order to achieve full autonomy in driverless cars we will need to see much more then just advanced tech in-vehicle, we will also need a significant step up in infrastructure in the cities and spaces around the vehicles. This week we talk about a second stock that is well positioned to benefit from the rollout of 5G and the need for connectivity in infrastructure to support the emerging autonomous driving sector.
5G and Autonomous vehicles
Read about Crown Castle (CCI.NYSE) in Part 1.
Author: Adam Wolf

Ericsson (ERIC-B.STO)

​This is another stock in our Global Mobility portfolio positioned in the connectivity theme that is well positioned to benefit from the rollout of 5G. Based in Sweden, Ericsson is one of the largest telecommunication services providers in the world. They provide wireless telecommunication solutions across the globe, including communication infrastructure and software solutions to the telecom sector.

Q1 2021 Results
 
​Market Cap
​Q1 Rev
​Div Yield
​Q1 Gross Profit
​Q1 Gross Margin
​Net Cash
Ericsson
$42bn
$5.82bn
1.6%
$2.5bn
42.9%
$5bn
Benefits of 5G for Autonomous Driving

A key pillar we focus on in our Global Mobility fund, alongside electrification and sharing, is autonomous vehicles. Google subsidiary Waymo, who are developing their autonomous vehicle technology, has now achieved level 4 autonomy. This means vehicles can drive and operate without a driver but can’t go just anywhere and can’t operate under certain weather conditions. Waymo has been operating autonomous vehicles in Phoenix and it's only a matter of time before they become utilised at scale. The current 4G network is not fast enough to properly support autonomous vehicles and enable them to make human- like decisions. Autonomous cars use a multitude of sensors in order to navigate the streets, these sensors generate large amounts of data  and, once autonomous vehicles get rolled out at scale, 5G will be integral to handling that amount of data at speed. Whilst higher data speeds are necessary in order for autonomous vehicles to work at scale, all roadside infrastructure will need to be connected. This involves traffic lights, sensors, cameras, road maintenance all communicating with each other. This connectivity will require significant investment in IoT (Internet of Things) and 5G. Mobile technology expansion will boost the flexibility of autonomous mobility through fast data communication between cars and other road infrastructure, such as traffic lights, sensors and other software that account for traffic and road maintenance. This will enable cars to safely travel at higher speeds, preemptively reduce their speed when necessary as well as aid in the efficient flow of traffic, preventing traffic jams. TAMIM’s Global Mobility fund is looking to capitalise on this growing ecosystem of companies that will be built around serving the electric and autonomous vehicle industry, companies like Crown Castle and Ericsson will play a vital role in ensuring that there is sufficient infrastructure and network capability for autonomous vehicles to operate efficiently.
5G will be critical to the roll out of autonomous vehicles
Source: American Towers, U.S. Technology and 5G Update Q4 2020
 Growth Strategy
​

With 34% of Ericsson sales coming from the US market, Ericsson has invested significantly in strengthening their portfolio offerings to benefit from 5G. Ericsson currently has nine live 5G networks across North America and, as more infrastructure is developed by our friends over at Crown Castle, Ericsson’s 5G network will expand significantly. They have 159 commercial 5G agreements/contracts with unique operators. Most recently, Ericsson won a pair of contracts from Vodafone to supply cloud native 5G core technology for Vodafone’s networks in the UK and Germany. Ericsson has been spending over $1bn USD every quarter on research and development, they continue to develop their IoT to strengthen their connectivity offering (essential to benefit from autonomous vehicles) and the connectivity demands that come with it.
Revenue which 5G will be important to capitlise on
Source: ericsson.com, 5G for Consumers
​The pandemic has only increased digitisation and data use which will further boost the demand for Ericsson’s services and, with key countries also banning Chinese operator Huawei, Ericsson has had their highest EBITDA margins since 2006. Its recent acquisition of Cradlepoint also expands the company’s presence in the enterprise 5G market.
Regional subscriptions and technology
Source: Ericsson Mobility Report, June 2021
Cradlepoint Acquisition

In November last year Ericsson announced its acquisition of Cradlepoint for $1.1bn at a EBITDA margin of 61%. Cradlepoint provides cloud-delivered wireless edge solutions for branch, mobile, and IoT networks. They have over 20,000 customers, 1,500 channel partners, and over a million SaaS subscriptions. Cradlepoint is very accretive to Ericsson’s 5G growth strategy and will be a key cog in their ability to compete with Cisco. Cradlepoint has focused on unlocking the power of 5G and connectivity for businesses and customers through its robust channel ecosystem. Ericsson, through their acquisition of Cradlepoint, now has an opportunity to deliver wireless solutions that are more intelligent and more integrated to the carrier 5G service.
Mobile telephone tower
Thesis
​

Ericsson is well positioned in the global race to roll out 5G infrastructure and are beginning to gain a bigger foothold of the global telecom market. The increased requirements and data demands of 5G are creating a mega thematic that Ericsson is looking to capitalise on. Ericsson already has plenty of 5G contracts with service providers in place and are investing heavily in their technologies for future growth. They are also looking for accretive acquisitions, like they have done with Cradlepoint who have boosted Ericssons product offering. Like CCI, Ericsson also stands to benefit from the emerging autonomous vehicle industry as a result of the increased need for 5G and connectivity through IoT. A catalyst that has emerged for Ericsson is the geopolitical issues surrounding Chinese telecom company Huawei, a Trump administration issue that Biden has retained. Key markets such as the US, Japan and the UK have outright banned their services with many more to follow, this opens the field right up for Ericsson to capitalise.
Countries that have banned Huawei
Source: Bloomberg

Disclaimer: Ericsson is held as a long position in TAMIM's Global Mobility portfolio. The TAMIM Global Mobility strategy seeks to  to capitalise on the ongoing $7 trillion autonomous and electric vehicle revolution.
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Stock Commentary

    At TAMIM we are committed to educating investors on how best to manage their retirement futures.

    Sign up to receive our weekly newsletter:

    * indicates required

    TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.

    Archives

    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    December 2015

    Categories

    All
    2016 Presidential Election
    5G
    AGM Season
    Apple (AAPL.NASDAQ)
    Asia Small Companies
    ASX
    ATL.AX
    Aus Equity All Cap Portfolio
    Aus Equity All Cap Value Portfolio
    Aus Equity Growth Portfolio
    Aus Equity Income Portfolio
    Aus Equity Small Cap Portfolio
    Australian Stocks
    Autonomous Vehicles
    Big Four Banks
    Brexit
    Electric Vehicles
    Emerging Markets
    Energy
    ENN.AX
    FAANG
    Financials
    Fintech
    Global Equity High Conviction Portfolio
    Global Mobility
    Gmg.ax
    Gold
    Growth Stocks
    Guy Carson
    Healthcare
    Income Investing
    Infrastructure
    International Stocks
    Investment Thematics
    IT Services
    Mergers & Acquisitions
    Mobility
    Pharma
    Property
    Rare Earths
    REITs
    Reporting Season
    Retail
    Robert Swift
    Ron Shamgar
    SLK.AX
    Small Cap Income Portfolio
    Small Caps
    Stock Report
    Takeovers
    Technology
    Telco Stocks
    Telstra (TLS.ASX)
    Tourism
    TPG
    Utilities
    Value Investing
    Video
    Wesfarmers (WES.ASX)

    RSS Feed

TAMIM | Equities | Property | Credit
​

TAMIM Fund
Australia All Cap
Australia Small Cap Income
Global Mobility
Global High Conviction
Credit

Listed Property
TAMIM Property
Company
About
Contact
Insights
Invest Online
Login
Other
Privacy Policy
Terms & 
Conditions
​Disclaimer
Contact
Level 4, 55 Grafton Street
Bondi Junction, Sydney NSW, 2022

1300 750 007

ima@tamim.com.au

DISCLAIMER

​The information provided on this website should not be considered financial or investment advice and is general information intended only for wholesale clients ( as defined in the Corporations Act). If you are not a wholesale client, you should exit the website. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions. Where the website refers to a particular financial product, you should obtain a copy of the relevant product services guide or offer document for wholesale investors before making any decision in relation to the product. Investment returns are not guaranteed as all investments carry some risk. The value of an investment may rise or fall with the changes in the market. Past performance is no guarantee of future performance. This statement relates to any claims made regarding past performance of any Tamim (or associated companies) products. Tamim does not guarantee the accuracy of any information in this website, including information provided by third parties. Information can change without notice and Tamim will endeavour to update this website as soon as practicable after changes. Tamim Funds Management Pty Limited and CTSP Funds Management Pty Ltd trading as Tamim Asset Management and its related entities do not accept responsibility for any inaccuracy or any actions taken in reliance upon this advice. All information provided on this website is correct at the time of writing and is subject to change due to changes in legislation. Please contact Tamim if you wish to confirm the currency of any information on the website.  

magellen, kosec, clime, wilson, wam, montgomery, platinum, commsec, caledonia, pengana, tamim

  • HOME
  • INVESTMENTS
    • Equities >
      • Australia All Cap
      • Australia Small Cap Income
      • Global Mobility
      • Global High Conviction
    • Property >
      • Listed Property
      • TAMIM Property
    • Income >
      • Credit
  • INSIGHTS
    • Insights
    • Weekly Reading Lists
  • ABOUT
  • CONTACT