Buy signal on Faurecia (EO-FR)
Faurecia is a €5.7 Bn market cap and one of the world leaders in the manufacturing of automotive equipment. Revenues are mainly split between seats (39% of sales, N°. 1 worldwide); vehicle interior modules (30%) including dashboards and cockpits, doors and door panels, and acoustic modules; exhaust systems (26%; No. 1 worldwide) andaudiovisual and multimedia equipment (4%) including radios, multimedia devices, navigation systems, automatic guidance systems, location systems, security assistance systems with CCD sensor cameras, wireless communication equipment, monitors etc. Revenues are mainly achieved in Europe (49%), North America (25%), Asia (21%) and South America (5%).
The company is expected to post a €-250m loss in 2020 coupled with a €14.4bn revenue and to recover sharply from 2021 with an expected €17.7bn revenue coupled with a €430m net profit.
Faurecia is already recovering volumes at the end of 2020 and will benefit from the Chinese recovery and EV ramping up. The company confirms its ambition of 8% profitability and 4% cash generation in 2022.
The company is looking to build a leadership position in Hydrogen technologies through innovation and commercial relationships.
Short term catalyst: Chinese momentum / margins recovery.
This signal looks consistent with the Major Bullish trend in the European Automotive sector.