Raising Faurecia's FVE to EUR 32 from EUR 30 on Effective Tax-Rate Change
We have raised our fair value estimate on the shares of no-moat-rated French auto-parts supplier Faurecia by EUR 2, to EUR 32. Morningstar now believes that tax reform under the Trump administration is more likely than not. We assumed a 25% statutory corporate tax rate on Faurecia’s U.S. pretax income, down from the current tax rate of 35%. Because U.S. revenue and net property, plant, and equipment since 2012 have averaged around 27% and 24% of the respective totals, the reduction to our effect...Faurecia is an automobile equipment supplier based in France. Co.'s activities can be divided into four business units: Automotive Seating (design of vehicle seats, manufacture of seating frames and adjustment mechanisms, and assembly of complete seating units); Emissions Control Technologies (design and manufacture of exhaust systems); Interior Systems (design and manufacture of instrument panels, door panels and modules, and acoustic components); and Automotive Exteriors (design and manufacture of front ends and safety modules). Some of Co.'s customers are PSA Peugeot Citroen, VW Group, Renault-Nissan, Ford Group, BMW and GM Group.
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