<Meeting Takeaways> Nexteer (1316 HK): 1Q22 business update; strong new business wins
- Launched 11 major customer programs in 1Q22, implying auto OEMs are still progressing with their new model pipeline
- Strong new business wins of about US$2.7bn, accounting for about 45% of 2022 target of US$6bn.
- Rising EV exposure, accounting for almost all of 1Q new business bookings
- Near-term global vehicle market operating environment stays challenging; but expect 2H22 outlook to improve
What’s new
Near-term operating environment for global light vehicle market dragged by supply chain disruptions (including key component shortages) and geopolitical conflict (resulting in elevated material costs). Based on IHS Markit forecast, 1H22 volume production is expected to decline by 1.1m units from same period last year while an improvement in 2H is possible, at 4.3m units to 42.1m units.
Major programmes launched comprise about half are EV models. Nexteer is making inroads in the North America heavy duty truck segment, following the awards from GMC, Ford and General Motors.
Strong 1Q22 new business wins (4x higher than 1Q21) show that auto OEMs are not slowing on their new model pipeline. Nexteer targets to achieve US$6bn for 2022, slightly better than 2021’s level. More importantly, the new business bookings are growing in proportion of the high value projects (such as steer by wire), which is positive on its long-term development.
We currently have BUY rating with TP of HK$8.