HSBC sees European auto suppliers catching up to OEMs

Schaeffler AG

24/05/2023 12:44

** HSBC expects European auto suppliers to more than
compensate 2023 inflation with pricing and improve their
relative profitability vs original equipment manufacturers
(OEMs)
    ** It expects suppliers not only to be able to offset 2023
costs increases but also to recover some of the un-absorbed
inflation from last year
    ** While OEMs benefited from production bottlenecks in
2021-2022 due to increasing car prices, the broker now sees
suppliers' profitability and growth entering an upgrade cycle
    ** The broker points to EPS momentum accelerating for
suppliers and decelerating for OEMs
    ** It names Faurecia  EPED.PA , Continental  CONG.DE  and
Vitesco  VTSCn.DE  its key "buy"-rated stocks
    ** HSBC says Faurecia is the most operationally and
financially levered supplier and in the best position to benefit
from a volume recovery
    ** The brokerage says consensus is overly conservative on
Continental, while Vitesco is the only European pure-play in the
growing EV market
    ** It also keeps "buy" on Schaeffler  SHA_p.DE  and
maintains "hold" on Hella  HLE.DE  and Valeo  VLOF.PA 

 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))