Valens Research

ADNT - Embedded Expectations Analysis - 2020 04 20

Adient plc (ADNT:USA) currently trades at a material discount to UAFRS-based (Uniform) assets, with a 0.6x Uniform P/B. At these levels, the market has muted expectations for the firm, and management may be concerned about their AYM operations, seasonality, and their investments

Specifically, management may be exaggerating the capabilities of their AYM technical center, their ability to expand AYM's scope into international markets, and the success of the Tesla Model 3 launch. Moreover, they may lack confidence in their ability to sustain Q1 2020 results, reduce SG&A spending, and meet equity income guidance. Furthermore, they may lack confidence in their ability to monetize non-core business investments, and they may be downplaying concerns about the lumpiness of commercial settlements and their near-term debt maturities
Adient plc

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  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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