JP Morgan published positive comments following their roadshow with Sensata’s CEO this week. A quick summary of what was discussed with investors is below:
· Starting to demonstrate leverage to electric vehicles: average content per vehicle now in line with gasoline vehicle (average is $30/vehicle), and even higher in hybrid vehicles (for example: $80/vehicle on Fiat 500e, $70 on Porsche Panamera, and $45 on Chevy Volt).
· China: this country presents the most upside for the next 3 years, and guidance includes a slowdown in production. The current average content per vehicle is $11, and is expected to rise 50% in the next 3 years.
· Large differences with the typical automotive supplier:
o more diversified end markets exposure (60% auto vs. 100% for other suppliers)
o low customer concentration risk
o cost structure: more variable/less fixed costs (which helped protect margins from experiencing huge swings in 2008)
o better cash flow generation
· Share buybacks more attractive since the re-domiciliation of headquarters to UK.
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$ST.US
Julie S. Praline
Director, Equity Analyst
Direct: 617.226.0025
Fax: 617.523.8118
Crestwood Advisors
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Suite 500
Boston, MA 02109