On September 29, Porsche will debut on the Frankfurt Stock Exchange in what could be the largest stock market opening in Germany, ahead of Deutsche Telekom’s €11.5bn in 2013, and close to Enel’s European record in 1999 of around €15.7bn.
The holding company It is already listed (the company is integrated into Volkswagen) but the market will welcome the firm’s luxury line at a time when the automobile sector on the Old Continent is down 20% this year.
The brand It is one of the aspects to take into account when choosing a vehicle and the German multinational has realized that having Porsche under the umbrella of the entire group reduces the prominence of its exclusive vehicles. Thus, the group has set the price of the firm’s preferred shares between 76.50 and 82.50 euros, which means valuing its line of sports cars with a capitalization between 70-75 billion euros compared to the previous target of up to 85,000 million.
In the opinion of Ben Laidler, global markets strategist at eToro, “the brand hopes to counteract the IPO drought and emulate the success of the Ferrari (RACE) spin-off from Fiat, which quadrupled its price in six years while avoiding the fate of Aston Martin, which has fallen by 95% since its debut on the stock markets”.
eToro: “The brand seeks to emulate the success of Ferrari’s spin-off from Fiat, which quadrupled its price in six years”
Taking Porsche’s net profit at the end of 2021 (4,038 million euros) as a reference, the German firm’s sports cars will start trading at a PER (number of times the profit is included in the share price) of 17, 3 times at the bottom of the valuation range and 18.6 times at the top.
This implies a demanding premium compared to the 6 times that the industry is quoted if the American Tesla (which distorts the average with a multiplier of 75 times) is excluded or from the 9 times at which titles are bought of Harley-Davidson, another of the world references when it comes to branding.
Of course, the reading changes if these multiples are compared with Ferrari, the firm with which Porsche aspires to compete face to face on the parquet. The Italian rival is trading at a P/E ratio of 39.2 times, meaning Porsche shares are bought at a 54% discount.
“An aggressive discount”, in Bankinter’s opinion, but which seems “logical and sufficient”. Its analysts argue that “despite belonging to the segment premiumPorsche’s margins are lower than Ferrari’s”, and encourage investors to attend the IPO, which will be accessible to minority investors from Germany, Austria, Switzerland, France, Italy and Spain.
“An aggressive discount”, in the opinion of Bankinter, but which seems “logical and sufficient”
However, from the orange entity they remember that if the Qatar Investment Authority (Volkswagen’s main investor with 17% of the voting rights) finally acquires 5%, the parent company would be putting only 10% of Porsche’s total capital on the market .”A free-float reduced will limit the attractiveness for certain institutional investors”, they add from the orange entity.
On the other hand, if the operation is carried out successfully, Volkswagen will distribute among its shareholders a special dividend for 49% of the funds raised in the IPO in early 2023.
“Even assuming the worst scenario proposed by the company (70,000 million euros for 100% of Porsche), the funds obtained would be at least 18,000 million euros and that the shareholders would receive an extraordinary dividend with a 10% return“, they point out from Banco Sabadell.