RENAULT (+) : A Postcard from SE Asia. On the Road with Renault

Research evidence excerpt

RENAULT (+) : A Postcard from SE Asia. On the Road with Renault

to go into higher segments (more B and C) as very challenging to make money

relative to local competition in. Supply chain is very efficient here and will use learnings to challenge in other regions

on their sourcing. Country is very dependent on oil imports seeing this accelerate EV demand there too in the short

term.

- South America: The Renault-Geely strategy in South America is mainly about using Brazil as a shared industrial

and commercial hub. Geely contributes EV/Hybrid technology and platforms. Renault contributes factories, dealers

and local market presence (allowing Geely to compete with BYD). The strategy here revolves around scaling

profitably with RNO initially manufacturing for Geely, then moving to manufacturing using Geely’s platform

themselves.

- HORSE: Cash generation from this venture expected to be very robust. Focusing on contract wins in both US and

India. First dividend to be received next year (which could be a substantial FCF support in our view, with RNO’s

share of HORSE net income at c.EUR240m already last year).

- Capital Allocation: Buyback needs authorisation of shareholders (notably the French state) and the board. Could

make a one off exception if there were changes to the Nissan holding. (Though in our view it feels like this is unlikely

in the short term).

- Humanoids/Defence: Took an equity stake in a Humanoid manufacturer and have 2 humanoids currently in

operation (in processes surrounding heavy lifting), this could scale quickly to c.300. Auto OEMs are likely to be

able to produce drones and defence products at scale more efficiently than defence companies. OEMs have much

more experience managing and tracking complex supply chains and industrialisation at low cost.