Adient PLC ADNT

We See Adient Having Good Margin Expansion Potential

Adient is the automotive seating business of Johnson Controls that was spun off to JCI shareholders in a taxable transaction Oct. 31, 2016. Adient, along with Lear, is a top two player in the seating market with midteens share globally. We think ignoring Adient just because it is an auto-parts supplier is shortsighted. Seating is one of the stickiest parts of the supplier sector since it is very difficult to take out an incumbent on a vehicle program, and automakers need suppliers that can consistently deliver high-quality seats in a just-in-time system throughout the world. Automakers have global platforms and are willing to pay for the right supplier rather than the lowest price supplier. We think the seating sector can benefit from autonomous and electric vehicles rather than be hurt by the change because AVs and EVs open up new seating configurations and possibly more electronics content in seats.