[ET Net News Agency, 8 March 2018] Credit Suisse assumed coverage of Johnson Electric
(00179) with a "neutral" rating and HK$30.20 (up from HK$28) target price. The rating is
derived by combining stable earnings growth of 12% 3-year CAGR and reasonable valuation.
The research house said, on the one hand, traditional automobile motor business enjoys
global auto electrification trend. CS expects electric motors used per vehicle to increase
from 68 units in 2016 to 98 in 2026, with a CAGR of 4%. The increasing number of motors
will help Johnson Electric's long-term growth.
Meanwhile, luxury cars that use more motors enjoy double-digit YoY growth in China,
which will also support Johnson's traditional motor business' top line growth.
On the other hand, Johnson Electric's industrial motor business might face lower margin
in the near term. Its acquired Stackpole is preparing new products (i.e., electric oil
pump), but still needs some time to monetise its notable capex given limited order flows
so far. (KL)