Adient – strong but constraint
Please find our unchanged analysis on Adient here.
The latest results clearly show the company’s turnaround is on track. We see the SSNs, in which we have a long position, as a good coupon clipping opportunity until we find opportunities to redeploy the cash.
The results for the quarter ending Dec 20 shows revenues almost fully back to 2019 levels, while EBITDA is well past those levels, thanks to the company’s turnaround program. Company’s adjusted EBITDA reached USD378m vs USD297m a year ago, despite the USD21m reduction in EBITDA due to the disposal of YFAI.
Some negative headwinds are impacting the company – commodity price increases, the semiconductor shortage affecting the entire auto value chain, the bottlenecks in global shipping currently affecting all tradeable sectors, and the continued Covid risk, to name a few. However, they are more than offset by the expectation on continued fiscal and monetary stimulus across the world, the solid final demand for autos, easy financing conditions, and restocking.
We expect Adient to continue to transition into a more conventional High Yield profile from now on.
Feel free to reach out if you would like to exchange ideas on the name.
Juliano
__________________________
E: jtorii@sarria.co.uk
T: +44 203 744 7055