- RE-ITERATE Buy Entry – 5.50 Target – 6.35 Stop Loss – 5.10
- Nexteer Automotive Group Limited is an investment holding company. The Company through its subsidiaries are primarily engaged in the design and manufacture of steering and driveline systems, advanced driver assistance systems (ADAS) and automated driving (AD) and components for automobile manufacturers and other automotive-related companies. Its operations are in the United States of America (USA), Mexico, Poland and the People’s Republic of China (China). The principal markets for the Company’s products are North America, Europe, South America, China and India. The Company has approximately 27 manufacturing plants, one global technical center, over two regional technical centers, one software service center and approximately 13 customer service centers. Its subsidiaries include Nexteer US Holding I LLC, Rhodes I LLC, Steering Solutions IP Holding Corporation, Chongqing Nexteer Steering Systems Co., Ltd., CNXMotion, LLC and Dongfeng Nexteer Steering Systems (Wuhan) Co., Ltd.
- Auto sales recovered in June. Automobile sales in China expanded 23.8% YoY to 2.5 mn units in June of 2022, boosted by government incentives to support the industry and a recovery in production, particularly in coronavirus lockdown-hit Shanghai, according to the China Association of Automobile Manufacturers. The auto part manufacturer sector also followed the recovery, but we still think the upside potential is bigger.
- New orders to uphold the growth. In 1Q22, the total value of new order signed amounted to US$2.73bn, four times of the total value signed in 1Q21. With the recovery in the auto markets in Europe and Asia Pacific, the oder book is expected to grow healthily in FY22.
- Updated market consensus of the EPS growth in FY22/23 is 19.4%/52.5% YoY respectively, which translates to 12.3x/8.1x forward PE. The current PER is 15.6x. Bloomberg consensus average 12-month target price is HK$6.67.