* Visteon's presence in Asia may attract suitors -analyst
* Operating structure more complex than peers
* Shares up more than 4 pct in June, besting S&P 500
DETROIT, June 27 Visteon Corp (VC.N), which
emerged from bankruptcy protection last year, could be a
"takeover candidate" for another auto parts supplier looking to
boost its presence in Asia, an analyst said on Monday.
"Visteon is on the road to recovery," Gimme Credit analyst
Evan Mann wrote in a research note. "Operating margins should
improve over the intermediate term as the company pursues
growth initiatives and increases volumes.
"We also view Visteon as a possible takeover candidate for
a global auto parts supplier looking to expand its presence in
Asia, especially China," he added.
Visteon could not be reached for comment. In recent weeks,
other analysts have also noted that Visteon could sell part of
Asia is the world's fastest-growing region for the industry
and automakers and their suppliers are rushing to expand
operations there. China recently surpassed the United States as
the world's largest auto market.
"We, quite frankly, like that overweight position in Asia,"
Visteon Chief Financial Officer Bill Quigley said at a June 15
conference. "That region will continue to, in our opinion,
dominate overall vehicle global production."
Visteon holds a 50 percent stake in Yanfeng Visteon
Automotive Trim Systems, a Chinese supplier of interiors and
seating, and 70 percent of Halla Climate, a South Korean maker
of air conditioning for vehicles. Some analysts have said
Visteon could buy the remaining 30 percent stake in Halla.
"VC's operating structure is more complicated than the
typical high yield auto parts supplier, but investors are
rewarded with extra yield," Mann wrote.
Visteon, which makes air conditioning, electronics and
lighting systems for automakers, derived 41 percent of its
sales from Asia last year, according to its annual filing.
About 29 percent of sales last year came from the
fast-growing Korean automaker Hyundai (005830.KS). Another core
customer is Ford Motor Co (F.N), which made up a quarter of
In the first quarter, Visteon won $300 million in new
business, with the majority to be manufactured in Asia, Mann
So far in June, Visteon's shares have risen 4.4 percent,
while the S&P 500 index has fallen 4.5 percent. Shares were
down 2 percent Monday afternoon to $63.94.
MANY STRATEGIC OPTIONS
In a June 8 research note, JP Morgan analyst Himanshu Patel
said Visteon could sell its interior business, which has been
struggling in Europe, but thriving in China.
Visteon could sweeten an interiors deal by selling its
stake in Yanfeng, which could fetch $2.3 billion, Patel wrote.
Possible bidders for that stake may include Johnson Controls
Inc (JCI.N), Lear Corp (LEA.N) and French supplier Faurecia
Visteon could also consider selling its lighting business,
Patel and UBS analyst Colin Langan said in notes.
Visteon entered bankruptcy in May 2009. Last year, the
company sold or closed its weaker factories and its operations
recovered alongside the rebound in the global auto industry.
The company's pink sheet stock jumped to $2 per share from
a few pennies at the end of 2009. This rise triggered a fight
for control of the company among the holders of secured loans,
shareholders and Johnson Controls. [ID:nN31232167]
"JCI attempted to buy Visteon in bankruptcy, and we
continue to believe another offer is not outside the realm of
possibility, especially given the interior margin improvement
opportunity potential under JCI's management," Langan said in a
June 14 research note.
(Reporting by Deepa Seetharaman; Editing by Gary Hill)