Nexteer:Steering autonomously

Upcoming technology shift unravels a significant set of opportunities

In the last technology shift, Nexteer earned its place as the No. 3 global steering supplier (up 2 places from 2012; out of 7competitors) gaining significant market share (from 4.8% in 2012 to 12.4% in 2018E). We believe the next majortechnology shift — largely driven by Advanced Driver Assistance System (ADAS)/Autonomous Vehicle (AV) — is likelyto be a game changer for Nexteer. We expect the company to capture market share based on enhanced tech capabilityand competitive advantage vs. peers, and reach new highs in terms of product ASP/margin/share on increased valuecreation (i.e., more software/sensor/control). We forecast 20% earnings CAGR over 2018E-2020E. Reiterate Buy.