A supplier to auto manufacturers globally, Visteon's (VC) biggest customers are Hyundai/Kia and Ford, and its main products are climate control and electronics parts and systems. The case for investing, writes Dave Waters on his OTC Adventures blog, is a simple one.
First, Visteon is overcapitalized and has authorized the buyback of $1B in stock by 2015, or about 26% of the float. The funding will be coming from the sale of its portion of a JV to its Chinese partner: Visteon expects $1.1B in cash before year's end, another $110M next June and $14M in June 2015.
Second is valuation at just over 4x EBITDA. The company is based in Detroit and valued as if that's where it does its business. A frustrated management is exploring a Hong Kong listing. "’In Asia, where the bulk of our business is and the bulk of the automotive industry is, this is a growth industry, but we’re not getting growth multiples," says CEO Tim Leuliette. "We need to start being valued on where we do business, not where we’re domiciled."
From last week: SA author David Tristan Liu also makes the bull case.