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Look to EMs to capitalise on driverless cars, A-rated manager duo say

Look to EMs to capitalise on driverless cars, A-rated manager duo say

Investors who want to capitalise on the development of driverless cars should look to companies in emerging markets for opportunities, according to Emery Brewer and Ivo Kovachev (pictured).

The Citywire A-rated managers highlight three stocks in the advanced driver assistance systems (Adas) market that are making many of the advances in car technology possible. One of the largest active positions in the JOHCM Emerging Markets fund is Chinese company Sunny Optical, which makes camera lenses – one of many essential technologies for the Adas sector.

‘Sunny Optical is benefiting from strong growth in camera lenses from top-tier Chinese smartphone manufacturers. But it is also gaining market share in the fast-growing Adas market, where it produces lenses for sensors and rear-view cameras in cars,’ the pair say.

‘Sunny Optical now has a leading worldwide market share – about a third – in the car cameras that facilitate Adas and commands very large profit margins in this lucrative niche. With a number of companies pouring money into the research and development of autonomous driving, the growth potential here is phenomenal.’

Korean firm Mando, meanwhile, which makes up 2.2% of the fund and is the seventh-largest holding, is also championed on this theme. The automotive supply company produces electronic steering and electric braking systems.

‘The company supplies a large number of car manufacturers including Tesla and Hyundai – it has reportedly been working with the former to help it develop a backup system for Tesla’s stage three and four autonomous driving systems,’ the managers say.

‘It recently reported better-than-expected growth from rapid sales of Adas for high-end Korean cars, as well as strong demand for the electric steering and braking components from Chinese and Indian car manufacturers.’

Emery Brewer and Ivo Kovachev’s manager ratings history since March 2013

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