Continental dangles an autonomous carrot

Aeye

08/02/2022 17:07

(The author is a Reuters Breakingviews columnist. The opinions
expressed are their own.)
    LONDON, Feb 8 (Reuters Breakingviews) - Fresh from spinning
off its engines unit Vitesco Technologies  VTSCn.DE , German car
supplier Continental  CONG.DE  is now considering a partial
listing of its autonomous driving unit in 2023 or later,
Handelsblatt reports  urn:newsml:reuters.com:*:nS8N2SS04X. After a grueling pandemic,
which saw revenue fall 15% in 2020, shareholders could expect at
least a modest bump.
    The unit which makes laser-scanning sensors and
high-performance computers to help cars navigate on their own,
is growing quickly as carmakers ramp up their bets on autonomous
driving. Continental expects its total addressable market to
double to 70 billion euros in the three years ending 2024 from
the 2018 to 2020 period. Assume sales were to bounce back to
2019 levels in 2022, and then grow 22% over the next two years,
in line with pre-crisis years, revenue could reach 3 billion
euros by 2024. That would imply a value of perhaps 6 billion
euros, assuming a 2 times sales multiple, in line with peer
Aptiv  APTV.N . That’s nearly a third of Continental’s current
market capitalisation. 
That could be conservative: loss-making peer Aeye  LIDR.O  is
valued at 20 times sales, according to Refinitiv. On the other
hand, a partial IPO could also leave the group saddled with a
complexity discount. (By Neil Unmack)     
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 (Editing by George Hay and Pranav Kiran)
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