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Summary
- LG and Magna e-Powertrain might get the responsibility of handling the initial volume production of Apple EVs.
- Recently, Magna grabbed a deal with Israeli startup REE Automotive to develop a modular electric vehicle.
- Manga is planning to expand its global manufacturing capacity in North America.
Canadian automotive supplier Magna International Inc. (TSX:MG) is drawing fresh attention from investors after a report claimed that its joint venture with South Korean company LG Electronics is partnering with tech giant Apple (NASDAQ:AAPL) to design the much-hyped ‘Apple Car’.
Last year, Magna International had signed a deal with LG Electronics to build components for electric vehicles (EVs). Their joint venture is known as LG and Magna e-Powertrain and if they finalize their deal with Apple, they will get the responsibility of handling the initial volume production of EVs.
The stock surged by 4.39 per cent in intraday trading at one point on April 13, and ultimately closed 1.33 per cent higher.
The company will likely get more attention from the investors in future as Magna's strength is electric powertrain systems and is capturing a significant market share in the EV industry.
With LG's expertise in component development, the company may take advantage of the market growth in e-motors, EVs and inverters in future and boost its revenues.
Magna Grabs New Deal & Focuses On Innovation
Since the company is focusing on growing in the EV market, it recently grabbed a deal with Israeli startup REE Automotive in which both the companies will partner to develop a modular electric vehicle.
Apart from the deal, Magna's latest eBeam technology will enable automakers to electrify heavy vehicles like a truck without affecting their efficiency. To reduce the carbon footprint, the Magna EtelligentEco system by the company can reduce greenhouse gases emissions by 38 per cent.
Magna is also planning to expand its global manufacturing capacity. In its investor presentation, the company claimed that it has plans to become an industry leader in North America, with focus on achieving carbon neutrality in the next 10 years.
A Look At The Stock & Financials
It is a C$ 35.4-billion company with a price-to-book (P/B) ratio of 2.481, as per data on the TMX. The company offers a 6.82 per cent return on equity (ROE) and 2.78 per cent return on assets (ROA). Every quarter, the shareholder gets a dividend of US$ 0.43 and the stock has a dividend yield of 1.859 per cent.
One-year performance chart of Magna International (Source: EODHD/Others)
Magna stock soared by 132 per cent in a year. In 2021, it has advanced by 30.2 per cent.
The stock closed at C$ 117.32 apiece on April 13, about 1.2 per cent down from its 52-week high of C$ 118.71 (March 18, 2021) and about 150 per cent up from a 52-week low of C$ 46.98 (April 15, 2020).
In Q4 2020, the company's sales were US$ 10.6 billion, an increase of 12 per cent from Q4 2019. For the same period, the income from operations (before taxes) was US$ 973 million, up by 48.1 per cent.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.
