Continental: FV cut by EUR19 following yesterday's profit warning, we downgrade our rating to Sell
We adjusted our 2018/19 EPS negatively after yesterday’s group’s profit warning on both its Automotive and Rubber divisions as for H2-18. We are still surprised by the timing of such communication only few weeks after group’s H1-18 earnings presentation. We understand a large part of this profit warning is company specific, with the group being too optimistic on its ability to convert an order book in real sales (similarly to Valeo?). We cut our rating from Neutral to Sell.Continental is an automotive industry supplier. Co.'s automotive divisions comprised of: Chassis & Safety, which develops and produces systems that provide safety and enhanced vehicle dynamics; Powertrain, which develops solutions for gasoline and diesel engines, as well as hybrid and electrical drive systems; and Interior, which provides solutions for information management within vehicles and networking between vehicles. Co.'s rubber divisions comprised of: Tires, which provides tires for passenger cars through trucks, buses and construction site vehicles to special vehicles, motorcycles and bicycles; and ContiTech, which develops products made from rubber and plastic.
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