Review of Magna International Inc.

MAR 18, 2025 - The company currently prioritizes productivity gains, operational efficiency and cash flow instead of capturing growth like MG did a few years ago. The growing EVs represent both risks and opportunities for MG, as growing demand for EVs and significant investment for OEMs could drive the increasing outsourcing to suppliers like MG. At the same time, MG also faces the risk of long-term displacement of some mechanical products that are permanently replaced by electrified solutions. In addition, the new customer base of early start-up electrified OEMs represents a significant counter-party risk for MG. In 2024, the company wrote off investments the company allocated to support the growth of the Fisker account, which recently went bankrupt. The current market conditions in MG operations remain highly uncertain, MG expects the company to resume its growth trajectory in FY2026. That being said, MG has a high exposure to the trade war and could be directly affected by the U.S.’s tariffs policy, making MG’s prospects appear as uncertain as ever. MG remains one of the most well-managed, shareholder-friendly companies in the auto component industry. That being said, to remain conservative given a variety of headwinds, we are downgrading the company by one notch to ‘B’.