Citi reiterates "Buy" for Australia's GUD, sees structural pressures weakening

Amotiv

10/04/2022 22:51

** Citi reiterates its "Buy" rating on automotive parts
maker GUD Holdings  GUD.AX  due to reduced structural pressures
facing its business around internal combustion vehicle exposure
and customer concentration
    ** Momentum improved in March as expected, noting the
high-quality nature of co's newly acquired APG business, which
in our view is GUD’s jewel in its crown- Citi 
    ** Brokerage sees potential for inventory to remain elevated
for longer than expected, depending on the duration of current
China lockdowns
    ** However, Citi says GUD is arguably more exposed to a
consumer slowdown which could occur from higher inflation and
interest rates
    ** Commenting on the quality of co's APG business, Citi says
APG has strong barriers to entry around a unique Australian car
parc and local regulations
    ** Seven of eight analysts rate the stock "buy" or higher
and one rate it "hold"; their median PT is A$15.25 – Refinitiv
data
    ** GUD up 3.34% this year as of last close, vs a 0.5% rise
in the ASX 200 benchmark index  .AXJO 


 (Reporting by Roushni Nair in Bengluru; editing by Diane Craft)
 ((Roushni.Nair@thomsonreuters.com;))