Continental: Toward the creation of a new organisation to unlock value
Continental: (NEUTRAL, Fair Value EUR195 (-4%))Toward the creation of a new organisation to unlock value
The German automotive supplier Continental indicated investors yesterday it will create a new holding structure to better apprehend the transformation of the sector, while confirming a carve-out and an IPO of its current Powertrain division is on the pipe for H1-19. We assume main objective is to unlock value from the different entities by obliging investors to only value Continental through a SOTP. The change of structure is set however on short term to cost around EUR450m. Such move is not surprising and not new. We have however difficulties to find upside on latest share price even when valuing the group only through a SOTP (€219/sh). As for now we stick to our €195/sh FV with Neutral rating unchanged.
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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