European autos: JP Morgan cuts global car production forecast

ElringKlinger AG

06/04/2020 09:23

** JP Morgan downgrades its global car production forecast
from about -9% to about -19% y-o-y, including LatAm, China,
North America and Europe  
    ** As a result, the broker slashes its earnings estimates
for OEMs by an average 15% and for suppliers by an average of
about 20%, which is its second earnings cut across the board
    ** The second quarter will be the most difficult for the 
auto industry, the broker says
    ** The "restructuring" cases across OEMs and suppliers, such
as Daimler  DAIGn.DE  ("overweight"), Renault  RENA.PA 
("overweight"), Gestamp  GEST.MC  ("neutral"), Leoni
 LEOGn.DE ("underweight") and ElringKlinger  ZILGn.DE  
("underweight"), will need to take decisive action in the short
term to avoid a prolonged cash burn, the broker says
    ** It says Volkswagen  VOWG_p.DE  ("overweight"), Nokian
 TYRES.HE  ("underweight"), Hella  HLE.DE  ("overweight") and
Stabilus  STAB.DE  ("neutral") will be well above the break-even
level 
    ** It says Daimler  DAIGn.DE  and Renault  RENA.PA  will
most likely burn EBIT in H1 
    ** The rest of its coverage will be working hard to deliver
a break-even EBIT level in Q2, it says
    ** The broker keeps "overweight" ratings on Faurecia
 EPED.PA , Plastic Omnium  PLOF.PA , Schaeffler  SHA_p.DE , TI
Fluid Systems  TIFS.L , Valeo  VLOF.PA , BMW  BMWG.DE , Michelin
 MICP.PA  and Schaeffler  SHA_p.DE 
    ** It rates Pirelli  PIRC.MI  "neutral" and Continental
 CONG.DE  "underweight" 


 ((marta.frackowiak@thomsonreuters.com))