Key Takeaways:
Nexteer Automotive reported record interim revenue of USD2.329 billion, up 3.9% year over year, with net profit climbing 35.2% to USD85.8 million.
The first-half results beat forecasts, JPMorgan said, while UOB Kay Hian raised its target price to HK$11.4 from HK$8.3 and maintained a Buy rating. The broker cited margin expansion in the EMEASA region and a lower effective tax rate.
Adjusted EBITDA margin widened one percentage point to 11.3%, helped by improved business performance across Europe, the Middle East, Africa and Southeast Asia. Management now expects the effective tax rate for the year to come in slightly below 25 percent, down from an earlier forecast of 33 percent. UOB Kay Hian trimmed 2026-2028 revenue forecasts by 0.9 percent to 1.1 percent but lifted the EMEASA EBITDA margin assumption to 11.5 percent from 8 percent and cut the tax-rate forecast to 24.5 percent.
Revenue growth was driven by new program launches, with the depreciation of the U.S. dollar against the Chinese yuan and euro contributing a favorable foreign exchange impact of approximately USD58.7 million. Customer pricing recoveries added USD9.9 million. Excluding foreign exchange and commodity recoveries, group revenue still grew 0.8 percent year over year, outperforming the decline in OEM production revenue by 180 basis points. Tariff-related costs of around USD8 million incurred last year have been recovered, although USD24 million in costs tied to the cancellation of North American electric vehicle projects have not yet been booked. Earnings per share came in at US3.4 cents.
Backlog orders reached USD3.3 billion, up 1.2x year over year, and management reiterated its full-year target of USD6 billion. The first steer-by-wire project has entered production, though management expects the technology's contribution to group revenue to remain limited before 2030. The company did not declare an interim dividend.
Nexteer shares jumped as much as 17 percent after the results, with the stock opening nearly 7 percent higher. The company also unveiled its High-Mount Direct-Drive steer-by-wire handwheel feel simulator, part of its Motion-by-Wire chassis strategy spanning steering, braking and rear-wheel steering.
The results show margin recovery and order momentum are building, with the tax-rate reset adding to earnings visibility. Investors will watch whether the company converts its USD3.3 billion backlog into the USD6 billion full-year target as steer-by-wire adoption accelerates.
This article is for informational purposes only and does not constitute investment advice.
