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ADNT - Embedded Expectations Analysis - 2020 08 14

Adient plc (ADNT:USA) currently trades at a discount to UAFRS-based (Uniform) assets, with a 0.7x Uniform P/B. At these levels, the market has expectations for profitability to remain muted, and management may be concerned about margin growth, their liquidity position, and China volumes

Specifically, management may lack confidence in their ability to sustain SG&A spend reduction, address fixed costs, and recover their volume drop in China. In addition, they may have concerns about the coronavirus impact on their earnings, customers pulling back new product launches, and their debt repayment schedule. Moreover, they may be exaggerating their ability to execute on their commitments, the progress of their restart procedure development, and satisfaction with their margin performance. Furthermore, they may be concerned about their liquidity position and expected burn rate. Finally, they may lack confidence in their ability to emerge stronger than peers when the industry fully recovers and make their metals and mechanisms business safe to operate
Adient plc

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