Amotiv Limited（AOV.AU）Investing in growth and resilience

Investment Rating - The report maintains a Buy rating for Amotiv Limited with a 12-month price target of A$13.00 [5][6] - The stock is considered cheap at 12x P/E, with a fair value closer to 15x P/E based on a sum-of-the-parts (SOTP) valuation [2] Core Views - The company has shown significant balance sheet improvement, with gearing reduced from ~2.6x in 1H23 to ~1.6x currently [2] - Earnings growth is expected to accelerate, with EBITA growth of 11% forecasted for FY26e, up from 3% in FY25e [2] - The company has made progress in cash conversion, achieving 93% cash conversion, better than the UBSe estimate of 85% [3] - New business wins are expected to contribute more materially from 2H25e onwards, supporting long-term organic growth [2] Financial Performance - Revenue for FY24 was $987m, an increase of 8% y/y, in line with consensus estimates [3] - EBITA for FY24 was $195m, up 5% y/y, supported by a strong 4WD&T EBITA margin of 18.0% [3] - Operating cash flow declined by 17% y/y to $171m, cycling a strong comparison period [3] - Net debt stands at $329m, with a net debt to EBITDA ratio of 1.6x, at the lower end of the target range [3] Earnings and Valuation - Minimal changes were made to EPS forecasts, with FY25e EPS trimmed by 2% and FY26e EPS unchanged [4] - The price target of A$13.00 is based on a DCF valuation (9.2% WACC) and SOTP valuation (11.1x EBITA) [5] - The stock is trading at a 12.2x P/E for FY25e, with a forecasted EPS growth of 12.6% in FY26e [7] Business Segments - The 4WD & Trailering segment saw revenue growth of 5% y/y to $349m, though it was 3% below UBSe estimates [9] - The LP&E segment grew 13% y/y to $324m, slightly above UBSe estimates [9] - The P&U segment grew 6% y/y to $314m, in line with UBSe estimates [9] Forecasts and Outlook - Revenue is expected to grow by 6.1% in FY25e and 7.6% in FY26e, reaching $1,127m by FY26e [7] - EBIT is forecasted to grow by 12.2% in FY26e, driven by stronger performance in the 4WD & Trailering and LP&E segments [7] - The company has flagged additional product development and greenfield investment, which is expected to support future growth [3]