MergerMarket.com
Perhaps Ferrari’s numbers can provide some respite for luxury automotive peer Aston Martin [LON:AML] which has struggled since an October 2018 IPO.
Ferrari has performed impressively since listing. Initially split out of Fiat Chrysler [BIT:FCA] through a USD 52 per share IPO in 2015, followed by a subsequent spin-off to FCA shareholders, the stock now trades at USD 127 in New York and EUR 110 in Milan.
Over the three years since listing, Ferrari has increased vehicle shipments from 7,664 annually to 9,251 and increased EBITDA from EUR 719m to EUR 1.1bn. Net industrial debt, management’s preferred measure of borrowing, has fallen from EUR 797m to EUR 340m despite an aggressive share buyback programme.
All of these are features which, if repeated at Aston Martin, could help it recover from something of a false start since its October listing. Shares in Aston are around a third below its GBP 19 per share IPO price. And Aston is now trading at a fairly substantial discount to Ferrari. Aston’s EV/EBITDA multiple of 13.6x compares to Ferrari’s 19.0x. Ferrari’s higher multiple is justifiable given its operational track record over the last four years. Aston, however, has plenty of room to run on its own strategy and could generate meaningful shareholder value if it is able to deliver on its plans.
Vehicle shipments in the third quarter increased 99% to 1,776 and are up 22% to 4,075 in the first nine months of 2018. Aston plans to up its production to 14,000 in the near-term which would see it manufacturing more cars than Ferrari despite the latter’s enterprise value, currently, being six times higher at EUR 21.2bn.
Margins provide another potential avenue of improvement for Aston. Full-year EBITDA margins are expected to be in the region of 23%. That’s still 10 percentage points shy of Ferrari’s 33% indicating plenty of room for future profit growth.
Ferrari’s numbers, published on 31 January, showed luxury automotive manufacturers may be able to buck the trend in a tough market for more conventional peers. If Ferrari can do it, so too, perhaps, can Aston Martin.