We upgrade AB Dynamics (ABD) with the risk-return trade-off now looking more favourable. Full year earnings last week were in line with our expectations and cash conversion has been strong. The earnings outlook is cautiously positive, and the Autos sector backdrop appears more benign. ABD’s valuation is more attractive, and the large net cash balance of c. £40m can be deployed to accelerate growth. In previous cycles, lower cash generation by the OEMs has led to cuts to R&D spend, the key driver ....
