JPM sees strong 2023 earnings for autos
05/12/2022 10:31
** J.P.Morgan sees 2023 as a strong earnings year for the
automotive industry, due to lower raw material cost volatility,
more stable supply chain, and global production schedules
boosting earnings momentum
** It sees global car production increasing 1% year-on-year,
with a strong H1 2023, weaker H2, despite still some
semiconductor bottlenecks lingering until 2024
** Pricing power should remain strong for original equipment
manufacturers (OEMs) well into H1 but suppliers will enjoy the
strongest year-on-year pricing power as carry over from 2022, it
says
** JPM sees raw material headwinds slowing, providing a
tailwind sometime in H2 2023
** According to the brokerage, battery electric vehicle
(BEV) penetration is to remain stable in Europe, and steadily
grow in North America and China
** JPM upgrades Vitesco Technologies VTSCn.DE to
"overweight" from "neutral" as the developer of solutions for
electric vehicles (EV) is benefiting from the overall EV global
penetration growth
** It downgrades Spanish car parts manufacturer Gestamp
Automocion GEST.MC to "underweight" from "neutral" awaiting
inflection in underlying cash generation
** It also cuts Plastic Omnium PLOF.PA to "underweight"
from "neutral" as it expects total cost inflation to be higher
in 2023 for the French plastic processing group compared to
2022, and higher ramp-up costs for the hydrogen business
** It names carmakers Renault RENA.PA , Mercedes Benz
MBGn.DE , Stellantis STLA.MI among its highest conviction
stocks, while Porsche PSHG_p.DE -- its preferred in the luxury
automotive segment, and rates all four "overweight"
(Reporting by Marta Frackowiak)
((marta.frackowiak@thomsonreuters.com))