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Share price of Johnson Controls, Inc. (JCI - Analyst Report) increased 4.3% to $46.69 on May 19 after the company announced an agreement to form a joint venture with a Chinese company – Yanfeng Automotive Trim Systems Co., Ltd. Yanfeng is a wholly owned subsidiary of Huayu Automotive Systems Co., Ltd. (HASCO), the component group of Shanghai Automotive Industry Corporation (SAIC).

The transaction will be a non-cash one, comprising of asset contributions by both parties to form the largest automotive interiors company in the world. In the new company, Johnson Controls will have 30% share, while the remaining 70% share will be owned by Yanfeng Automotive.

The company will be based in Shanghai. It will have global engineering, development and customer centers in the United States, Europe, China, Japan and India. The new company will manufacture instrument panels, interior systems, door panels and floor consoles and is expected to generate $7.5 billion of annual sales.

The deal is expected to close by the first half of 2015. However the deal excludes some facilities of both Yanfeng and Johnson Controls' existing networks. Johnson Controls will operate those excluded facilities within its network as part of its Automotive Experience business.

This joint venture will form a strong company with a leading market position and the capability to achieve sustained global growth. This new joint venture will also support Johnson Controls in expanding in China, which is rapidly a growing automotive market.

Johnson Controls is a supplier of automotive interiors, batteries and other control equipment. It currently holds a Zacks Rank #4 (Sell).

Some other stocks worth considering in the same industry are Gentherm Inc. (THRM - Snapshot Report), Modine Manufacturing Co. (MOD - Snapshot Report) and Magna International Inc. (MGA - Analyst Report). Gentherm and Modine carry a Zacks Rank #1 (Strong Buy), while Magna is a Zacks Rank #2 (Buy) stock.

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