Automotive parts supplier Amotiv Ltd (ASX: AOV) delivered an unexceptional set of full year results this week, but that hasn't stopped the analyst team at Macquarie from taking a shine to the company's shares.
Macquarie has an outperform rating on Amotiv shares and a bullish share price target which I'll get to later.
First, let's look at the results.
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Amotiv hits guidance with modest growth
Amotiv this week reported revenue growth of 2.7% to $1.02 billion, with underlying net profit coming in at $120.3 million, up 1.3%.
In the 4WD accessories division revenue was up 3.8%, despite weakness in sales of some key models such as the Ford Ranger and Toyota Hilux.
Bu the company said it was developing further relationships with Chinese manufacturers.
The company said:
Relationships with Chinese OEMs continued to develop with supply commencing on the BYD Shark 3.5T vehicle and towbar supply relationships in place with all other Chinese OEMs who have entered the Australian market.
Amotiv declared a fully franked dividend of 23 cents per share, payable on 15 September.
For FY27 the company was forecasting, "modest revenue and underlying EBITA growth in FY27, with growing offshore revenue, pricing and Amotiv Unified offsetting subdued ANZ conditions''.
Amotiv said it expected its strong balance sheet and cash performance to be maintained, "providing flexibility to support growth and capital management including potential buy back optionality''.
The company is also closely monitoring developments in the Middle East and the impacts that might have on end user demand.
Brokers think Amotiv shares are going cheap
Macquarie analysts said in a note to its clients that the company was performing well, with the FY26 result in line with guidance and consensus expectations.
They said:
Resilient result despite subdued end-market conditions, outlook supported by offshore growth, pricing initiatives and cost discipline. At less than 9x PE valuation looks attractive.
Macquarie has a price target of $11.60 on Amotiv shares compared to $6.44 currently.
UBS analysts also believe Amotiv shares are undervalued.
They said:
In our view, the result demonstrated solid execution in a challenging operating environment, with strong cost control (Amotiv Unified), positive offshore expansion momentum and broadening the Chinese OEM exposure in 4WD (supplying BYD +13 other brands +7 brands yet to launch) the key positives.
UBS said they remain cautious about the broader macroeconomic conditions in Australia, but still revised their expected earnings for Amotiv upwards.
UBS increased their price target for the company from $9.80 to $9.90.
Amotiv is valued at $857.9 million.
