Dowlais' rather dowdy performance since splitting from Melrose is not justified for such a market-leading business, according to RBC.
It is the renamed auto arm of GKN, the aerospace bits stayed with Melrose, and its shares are down 19% year-to-date compared to a 12% rise for its European peers.
Dowlais prospects though are not materially worse than the wider auto sector, argues RBC, and in fact might be a bit better.
Car volumes and currencies are headwinds this year, but this is a sector issue rather than Dowlais-specific.
Dowlais should be a net winner in the EV transition, positioned to outgrow the underlying auto markets and significantly expand operating margins.
Underpinning all that is a dominant position in sideshafts, which alone can account for around 100% of the group market cap today despite being only half of the group sales.
Results are due on 21 March and on a valuation of six times 2024 earnings with a free cash yield of 10%, Dowlais shares look “very attractive” in the bank’s view.
For 2024 “We still forecast Y/Y profit progress despite the softer markets reflecting cost actions, positive momentum in GKN Auto, and the fall-away of the UAW strike-related impacts (£10-15m on EBITA)".
Shares were down slightly at 85.1p against RBC’s target of 150p (down from 170p) and 'outperform' rating.