Plastic Omnium: Oddo maintains 'buy' rating

(CercleFinance.com) - Following the publication of Plastic Omnium's H1 results, Oddo maintains its Buy rating on the stock, along with its target price 30 euros.


Oddo points out that the group's outperformance (+7.1 pt) was, unsurprisingly, driven by China (+13.5 pt) and North America (+10.2 pt), where the group has won many contracts over recent years.

The group's guidance, which includes a slight drop in EBIT relative to 2018, seems to confirm that the worst is now behind us and that profitability should, again, progress sequentially (7.2%e). This, coupled with the sharp decline in Capex, which this year has been concentrated in H1, should enable the company to easily reach its FCF target of over 200 million euros, the broker says.

Oddo adds that it remains cautious - mainly towards so-called technological equipment manufacturers (Valeo, Continental), which: 1/ need more growth to stabilise their margins; 2/ have more difficulty in reducing their costs and generating FCF; 3/ have based their guidance on production assumptions that are now obsolete (0/-1%).


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