Presented by
Nan Liang
Tianbai Wang
Qi He
May 1, 2012
Agenda
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
Intro
Related Stock Market
Macro Review
Business Review
Comps
Financial Analysis
DCF
Intro

Business Description
Gentex Corporation designs, develops, manufactures and markets
proprietary electro-optic products, including automatic-dimming
rearview mirrors for the automotive industry and fire protection
products mainly for the commercial building industry.
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Sector: Consumer Goods
Industry: Auto Parts & Equipment
GICS Map: 251010
Revenue in 2011: 1.02Billion
Resource: GNTX 10-K
Products
Resource: GNTX Official Website
Global Business Distribution
Resource: GNTX Official Website
Intro
Financial Description
52 Week Range: $20.69 - $32.21
PEG: 0.95
Trailing P/E: 18.78
Forward P/E: 15.26
Implied 1 Year Growth Rate: 23%
5-7 Growth Rate: 5.14%
Market Cap: 3.15 B
Beta: 1.51
Resource: Yahoo Finance
Related Stock Market
Resource: Yahoo Finance
Industry
Global Automobile
Auto Parts Manufacturing
Mirror Manufacturing
Global Automobile Manufacturing & Auto
Parts Manufacturing
Global Auto
Vehicle Sales
Global Auto Parts
Manufacturing
Resource: IBIS World
Business Locations
Resource: IBIS World
Automakers
Resource: IBIS World
Industry Opportunity
Economic Indicator – Consumer sentiment index
Demand Growth
Government Intervention
Regulation & Tech Innovation
Cheaper Currency & Competitiveness
Opportunity 1 – Better Economy
When households are optimistic about their financial future and the economy, they are more likely
to spend money on big-ticket items. Purchasing a new vehicle requires a significant outlay, which
is often financed through loans. In times of economic downturns, households are less willing to
spend money on expensive items, for fear of losing their jobs and being unable to meet
repayments. Consumer sentiment has been fairly low around the globe in 2009 due to the global
financial crisis.
Resource: IBIS World
Opportunity 2 – Demand Growth
Developed
Economies
• Mature industry with limited growth
potential as the market is saturated
• Aging population & Replacement of
existing vehicles
Emerging
Economies
• Rising wealth, standards of living
and access to proper road
infrastructure
• Population (esp. young adults)
growth
Opportunity 3- Government Incentives During
Recession
Vehicle Scrappage Programs (Cash Rebates)
Cash for Clunkers Incentive Program
Tax Rebates to Business
Cash Rebates to Replace Old Vehicles
Credit Markets & Tax Cut

Governments created incentives to drive up car sales and keep jobs safe.

Though interventions not be enough to keep global revenue positive.
Opportunity 4 – Regulation & Innovation

February 2008: KTSA signed into law, requiring all
new vehicles in the U.S. to increase the field of view
while backing up

2008 – 2009: National Highway Traffic Safety
Administration (NHTSA) initiated rulemaking process

December 7, 2010: NHTSA published initial rule,
requiring the use of backup cameras and related
displays
Market Risks
Economic Activity Volatility
Fuel & Steel
Costs
Pricing Pressures
from Automotive
Manufacturers
Auto
Parts
ESTIMATED AUTOMATIC-DIMMING MIRROR
GLOBAL MARKET SHARE
Resource: GNTX Presentation
Auto-Dimming Rearview Mirrors Market
GNTX: Leading producer and the dominant supplier to the automotive
industry: 88% market share worldwide in 2011, 85% in 2010.
U.S. manufacturer Magna: hybrid or solid polymer matrix versions of
electro chromic mirrors.
2 Japanese manufacturers: supply a few vehicle models in Japan with
solid-state electro chromic mirrors.
Some small Chinese domestic mirror suppliers: selling auto-dimming
rearview mirrors, in low volume, within the domestic China automotive
market but not currently meet global automotive grade specifications.
Resource: GNTX 10-K
Product Lines
Found In 1974
Manufacturer Of These
i.e. Boeing 787
Fire
Protection
Products
Dimmable
Aircraft
Windows
AutoDimming
Rearview
Mirrors
98%
Of Total Sales
Source: Gentex’s Website
Auto-dimming Mirrors
Glare
Source: Investor Presentation
Smart Beams ®
Source: Investor Presentation
Rear Camera Display (RCD) Mirror
Source: Investor Presentation
Revenue Growth
Source: Annual Reports
Main Clients
Source: Annual Reports
Region
Source: Annual Reports
Global Market Share (2011)
Main Competitor
Magna Mirrors
Source: Annual Reports
Competitor: Magna Mirrors
+ Owned by Magna International, Inc. (NYSE: MGA)
+ MGA also produces lots of auto parts for cars:
Body, Seating, Roof, and hybrid energy system, etc.
It’s Gentex’s Main Competitor.
But Comparable or Not?
Multiples
Mkt. Cap
EPS
P/E
EV/EBITDA
GNTX
3.21B
1.17
19.12
9.77
MGA
10.21B
4.20
10.44
4.54
DLPH
10.16B
3.61
8.57
4.89
LEA
4.22B
5.08
8.27
3.13
BWA
9.17B
4.73
16.90
8.97
Target Price: $7 - $20
Gentex Current Price: $22
Source: Bloomberg & Yahoo!Finance
Financial Analysis

Capital Structure


0 Debt
Quick Ratio
Quick Ratio
10.50
9.50
8.50
7.50
6.50
5.50
4.50
3.50
2.50
Cash Ratio
Current Ratio
2007
4.65
7.73
2008
5.95
9.24
2009
5.73
8.62
2010
4.83
9.09
2011
3.56
7.47
Data Source : 10-K
DuPont Analysis
120.0%
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
FY 2011
FY 2010
FY 2009
FY 2008
FY 2007
Tax Burden
67.4%
67.7%
67.1%
67.3%
67.9%
Operating Margin
22.6%
23.4%
17.4%
17.4%
21.7%
Asset Turnover
0.94
0.89
0.69
0.75
0.78
Leverage Ratio
1.13
1.12
1.11
1.10
1.12
ROA
21.2%
20.9%
11.9%
13.1%
16.8%
5 Year Average Adj ROE
14.0%
13.4%
12.8%
14.0%
15.2%
Data Source : 10-K
Profit Margin
20.00%
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
TERMINA
L YEAR
Profit Margin 18.68% 9.95% 11.87% 16.87% 16.08% 15.66% 15.61% 14.76% 14.87% 14.67% 13.65%
Data Source : 10-K
Recommendation
Current Price: $22.05
DCF: $27.2 - $35.5
Multiple: $7- $20
Buy 200 shares at market price,
about 1.5% of the portfolio