Josh4580 Posted September 7, 2011 Share Posted September 7, 2011 Attached is my write-up on Visteon Corp. I believe the Sum-of-the-Parts valuation on Visteon is $82 per share versus its closing price today of around $48. There are also warrants to purchase VC at $58.80 that trade under the symbol VSTOW.OB for a current price of $14.25. They have 4 years life remaining. Feedback/comments are welcome.Visteon_Write_Up_2.pdf Link to comment Share on other sites More sharing options...
Myth465 Posted September 7, 2011 Share Posted September 7, 2011 Great write up thanks for sharing. Link to comment Share on other sites More sharing options...
AZ_Value Posted September 7, 2011 Share Posted September 7, 2011 Really nice write-up. Definitely worth a look. Thanks. Ron Link to comment Share on other sites More sharing options...
savant Posted September 7, 2011 Share Posted September 7, 2011 Given that a majority of Yangfeng's sales are to SAIC, what makes you think that SAIC will allow a sale of Yangfeng? Given that IF there is a likely buyer it can only be SAIC I would assume that the multiple on Yangfeng should be even lower than 10x. Link to comment Share on other sites More sharing options...
Josh4580 Posted September 18, 2011 Author Share Posted September 18, 2011 Looks like Barrons ripped off my idea :) "Visteon Shifts Into a Higher Gear: The car-parts maker is an undervalued play on Asia's booming automotive market. Why its diverse collection of assets could be worth more than 80 a share." http://online.barrons.com/article/SB50001424052702303447204576568932797531132.html?ru=yahoo&mod=yahoobarrons Link to comment Share on other sites More sharing options...
BargainValueHunter Posted October 28, 2011 Share Posted October 28, 2011 http://www.bloomberg.com/news/2011-10-28/ford-spinoff-visteon-said-to-try-to-sell-units-to-focus-on-asia.html?cmpid=yhoo Visteon Corp., the auto-parts maker spun off by Ford Motor Co. (F), is shopping two of its four units to pare low-margin revenue and focus on faster-growing operations in Asia, five people familiar with the sales process said. Visteon, which exited a 16-month bankruptcy last October, aims to divest its lighting and interiors units to other suppliers, said the people, who asked not to be identified because the plans are private. The divisions brought in about $2.7 billion in revenue last year and may fetch as much as $450 million combined. Rothschild is representing Visteon in both efforts, one of the people said. This is nice... Its market capitalization, currently at $2.78 billion, has been less than the value of its stakes in Halla and Shanghai- based Yanfeng Visteon Automotive Trim Systems Co., a venture with SAIC Motor Corp., according to data compiled by Bloomberg. Visteon now has a third the revenue it had in 2000, when it spun off from Ford as a standalone company. Originally dependent on the North American market, last year Visteon said it got 40 percent of its sales from Asia and 36 percent from Europe. It counts Hyundai Motor Co. (005380) of Seoul among its biggest customers. Including results from unconsolidated joint ventures, Visteon gets 56 percent of its sales from Asia. VC 56.99 +5.83 +11.40% Volume: 1,495,434 Warrants up 22% today Link to comment Share on other sites More sharing options...
Josh4580 Posted October 29, 2011 Author Share Posted October 29, 2011 This is really just the start of thesis playing out. I hope management continues to make the necessary changes to unlock shareholder value. Link to comment Share on other sites More sharing options...
Olmsted Posted November 1, 2011 Share Posted November 1, 2011 I took a stab at updating my valuation for Visteon in light of its intention to sell two divisions. You'll notice that I borrow from the writeup at Distressed Debt Investing and from Joshua Corn's above. Thanks Hunter and Joshua for for bringing this one to my attention. http://www.distressed-debt-investing.com/2010/10/post-reorg-equity-visteon-revisited.html Here goes: There are currently 4 divisions, climate, electronics, interiors, and lighting. They are trying to sell the interiors and lighting divisions, with sales largely in N America and Europe. These two divisions contribute about $2700m in sales and have a 4.4% EBITDA margin, for $118.8m in EBITDA. Right now North American-centric auto parts companies are trading at an average EV/EBITDA of 3.8. $118.8m x 3.8 = $451m, exactly what the Bloomberg article put them at. So what is the rest worth? I’ll start by breaking out the “core” Visteon EBITDA, applying a market multiple to it, then adding the value of its stake in Halla and its Asian JVs. The climate division had $3300mn in sales. About 80% of the climate division’s sales consist of Visteon’s consolidated interest in Halla. I’m going to split Halla out later, so let’s just look at the non-Halla climate sales. 20% of $3300mn is $660m. North American and European Visteon has a lower margin than its Asian subsidiaries and JVs, somewhere slightly north of 4%. The non-Halla climate division then contributes about $26.4mn of EBITDA. The electronics division contributes about $1400m in sales. Applying a 4% EBITDA margin we get $56m in EBITDA. The residual value of these parts is then 3.8*($26.4m+$56m), $313m. Visteon owns 70% of Halla climate. Valuing this is pretty simple since it trades on the Korean market, with a market cap of $2.2bn. This is a trailing PE of 12 which is pretty reasonable given the growth. Visteon’s stake is worth $1.53bn. Visteon owns several unconsolidated Asian JVs, the largest is Yangfeng. The 10Q shows that these JVs are on track to do $346m in net income (~$300m from Yangfeng, ~$46m from the other JVs). Chinese auto parts companies are trading around a PE of 10 right now, valuing Visteon’s 50% stake in the Yangfeng and the other JVs at $1.73bn. This may be conservative given Yangfeng's ~30% YoY growth. It is certainly not aggressive considering Johnson Controls put in a lowball bid for it at $1.25bn during bankruptcy, when it was considerably smaller. I’ll do a fully-diluted valuation below, which will assume ~3m warrants are exercised for $115m of proceeds. On the 10Q there are a bunch of miscellaneous assets and liabilities, most of which net out with each other. To be conservative, I won’t deal with tax assets. There is $839m of cash versus ~$600m of debt, or net cash of $239m. This gives us a value of $451m + $331m + $1530m + $1730m +$115m + $239m, or $4375m. With ~54m fully-diluted shares we get $81/share. This is within the range valuations I’ve heard bandied about, from $75-$90 a share. From my perspective, this still looks like a good bet based on the discount to the sum of the parts valuation. I would say, however, that there is not quite enough of a margin of safety if one were not positive on the auto parts sector in general, given that the sum-of-parts valuation is based on peer multiples. I am positive on the sector, with where I think we are in the cycle, given, among other things, the average age of US autos and the secular growth story in Asia. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted June 18, 2012 Share Posted June 18, 2012 Anybody take a look at the VC warrants lately? They are either a massive bargain or nearly worthless! :o Link to comment Share on other sites More sharing options...
thomcapital Posted June 20, 2012 Share Posted June 20, 2012 I have. I decided to add to my VC position instead. Link to comment Share on other sites More sharing options...
Olmsted Posted June 20, 2012 Share Posted June 20, 2012 The warrants have been a disaster so far. While management with a vision of unlocking value is good, Visteon's global footprint is in all the wrong places right now (Asia first, then Europe, N America last). Plus the sector is hated now. Management and the board do seem focused on transforming the company - four new "change" directors were elected at the shareholder meeting last week. But it is an open question whether they will be able to unlock value in the face of severe recessions in Europe and possible slowing in China. Perhaps the sum-of-the-parts I posted will come to fruition, but maybe not in time for the warrants to be the right vehicle. They very well could be a zero. Link to comment Share on other sites More sharing options...
17thstcapital Posted August 2, 2012 Share Posted August 2, 2012 The one goes from bad to worse. The warrants are now a lottery ticket at 1.65. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted August 4, 2012 Share Posted August 4, 2012 Friday evening press release? Hmmm.... http://phx.corporate-ir.net/phoenix.zhtml?c=122447&p=irol-newsArticle_print&ID=1722425&highlight= Visteon Corporation (NYSE: VC) today announced that the net operating loss protective provisions (the "NOL Protective Measures") contained in Articles FIFTH, SIXTH and SEVENTH of the company's second amended and restated certificate of incorporation (the "Certificate") are currently applicable based on the current market capitalization of the company. As a result, persons are restricted from becoming "Five-Percent Shareholders" (as defined in the Certificate) and existing "Five-Percent Shareholders" are restricted from making additional purchases of Visteon's stock, without giving written notice of a proposed transaction to the company and obtaining the approval of Visteon's board of directors. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted May 9, 2013 Share Posted May 9, 2013 Warrants now in the money with ~2.5 years to go! Link to comment Share on other sites More sharing options...
Olmsted Posted May 13, 2013 Share Posted May 13, 2013 Warrants now in the money with ~2.5 years to go! And cheap too. 17thSt Capital observed their general cheapness - which spurred me to update the calculation. ~5% annual cost of leverage, which of course includes the embedded put option, and a breakeven at $71. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted August 13, 2013 Share Posted August 13, 2013 http://finance.yahoo.com/news/visteon-sell-stake-chinese-jv-105814401.html Visteon is selling its stake in a Chinese joint venture for $1.25 billion. The auto parts supplier says it will apply proceeds from the sale of its 50 percent stake in Yanfeng Visteon Automotive Trim Systems on a $1.2 billion share buyback program that runs through December 2015. Visteon is selling its stake in Yangfeng to Huayu Automotive Systems Co. Ltd. Visteon Corp. says it expects to receive about $1.1 billion of the cash proceeds before Dec. 31. http://finviz.com/chart.ashx?t=VC&ty=c&ta=1&p=d&s=l Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now