Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

Lithia Motors Inc Cl A / Equity Bottom-Up

<ul><li>Lithia Motors has presented its first quarter of 2024 results in an interesting landscape of transition and growth, marked by significant strategic engagements and expansions.</li><li>The company saw a rise in revenue to $8.6 billion, a 23% increase from the previous year.</li><li>This growth in revenue helped counterbalance the impact of decreasing Gross Profit per Unit (GPUs) on new and used vehicles.</li></ul>

Lithia Motors has presented its first quarter of 2024 results in an interesting landscape of transition and growth, marked by significant strategic engagements and expansions.The company saw a rise in revenue to $8.6 billion, a 23% increase from the previous year.This growth in revenue helped counterbalance the impact of decreasing Gross Profit per Unit (GPUs) on new and used vehicles.

Lithia Motors: Expansion of Driveway & E-commerce Platforms A Major Growth Catalyst? - Key Drivers

<ul><li>This is our first report on automotive retailer, Lithia Motors.</li><li>The company had a strong Q4 2023, with revenues growing by 11% from last year to reach $7.7 billion.</li><li>The company's revenue increase was primarily driven by robust new vehicle sales, with same-store units increasing by 10% and aftersales revenues growing by 3%.</li></ul>

This is our first report on automotive retailer, Lithia Motors.The company had a strong Q4 2023, with revenues growing by 11% from last year to reach $7.7 billion.The company's revenue increase was primarily driven by robust new vehicle sales, with same-store units increasing by 10% and aftersales revenues growing by 3%.

Lithia Motors: Initiation Of Coverage - A Story Of UK Market Growth Through The Pendragon Acquisition

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>On 17 October, <a href="https://www.smartkarma.com/entities/autonation-inc" target="_blank" data-smartkarma-citation="entities:16548:1" rel="noopener">Autonation Inc (AN US)</a> also withdrew its proposal for <a href="https://www.smartkarma.com/entities/pendragon-plc" target="_blank" data-smartkarma-citation="entities:22080:1" rel="noopener">Pendragon PLC (PDG LN)</a>. Lithia's deal is likely to obtain shareholder's approval, for lack of a better offer.</li>
<li>Holding on would mean receiving 24.5p and staying in a small cap SaaS, whose shares are implicitly valued at 6.5p, instead of the 10.9p that Pendragon claims it is worth.</li>
<li>Readacross: Hedin, AutoNation, or someone else, could take a closer look at <a href="https://www.smartkarma.com/entities/vertu-motors-plc" target="_blank" data-smartkarma-citation="entities:23247:1" rel="noopener">Vertu Motors (VTU LN)</a>.</li>
</ul>


On 17 October, Autonation Inc (AN US) also withdrew its proposal for Pendragon PLC (PDG LN). Lithia's deal is likely to obtain shareholder's approval, for lack of a better offer.
Holding on would mean receiving 24.5p and staying in a small cap SaaS, whose shares are implicitly valued at 6.5p, instead of the 10.9p that Pendragon claims it is worth.
Readacross: Hedin, AutoNation, or someone else, could take a closer look at Vertu Motors (VTU LN).


<ul>
<li>The game is on with the sweetened offer from Lithia, valued at 35.4p/share (24.5p divi + stake in Pinewood). <a href="https://www.smartkarma.com/entities/pendragon-plc" target="_blank" data-smartkarma-citation="entities:22080:1" rel="noopener">Pendragon PLC (PDG LN)</a>'s shares are trading just below, at 35.2p.</li>
<li>It is now the turn of either Hedin or AutoNation to raise their offers. 32p/share seems a fair value for the standalone business. Synergies could be worth up to 10.54p/share.</li>
<li>Assuming a bidder distributes 60% of synergies to Pendragon shareholders, a potential offer price of 38.3p/share, in cash, 8% above Lithia's offer, could still be value enhancing.</li>
</ul>


The game is on with the sweetened offer from Lithia, valued at 35.4p/share (24.5p divi + stake in Pinewood). Pendragon PLC (PDG LN)'s shares are trading just below, at 35.2p.
It is now the turn of either Hedin or AutoNation to raise their offers. 32p/share seems a fair value for the standalone business. Synergies could be worth up to 10.54p/share.
Assuming a bidder distributes 60% of synergies to Pendragon shareholders, a potential offer price of 38.3p/share, in cash, 8% above Lithia's offer, could still be value enhancing.


<ul>
<li>My comparables derived valuation of <a href="https://www.smartkarma.com/entities/pendragon-plc" target="_blank" data-smartkarma-citation="entities:22080:1" rel="noopener">Pendragon PLC (PDG LN)</a> is 32p/share, above the value of Lithia's "package" and spot-on Hedin's unsolicited &amp; preliminary revised offer (well above its initial lowball offer).</li>
<li>The market seems skeptical about the future prospects of Pinewood. Putting it on a 13.3x multiple, the value of the business would still be c. 11p/share, hardly a game-changer.</li>
<li>The revised Hedin's offer is 17% above Lithia's, with no execution risk (Hedin backing off again seems less likely), and probably enough to win Board's recommendation. Gross spread, 5.6%. Long.</li>
</ul>


My comparables derived valuation of Pendragon PLC (PDG LN) is 32p/share, above the value of Lithia's "package" and spot-on Hedin's unsolicited &amp; preliminary revised offer (well above its initial lowball offer).
The market seems skeptical about the future prospects of Pinewood. Putting it on a 13.3x multiple, the value of the business would still be c. 11p/share, hardly a game-changer.
The revised Hedin's offer is 17% above Lithia's, with no execution risk (Hedin backing off again seems less likely), and probably enough to win Board's recommendation. Gross spread, 5.6%. Long.


United States

Lithia Motors, Inc. retails, finances, and services new and used vehicles. The Company also provides other related services and products, such as the sale of parts and accessories, extended service contracts, aftermarket automotive products, and collision repair services. Lithia Motors operates throughout the United States.

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Lithia Motors Inc Cl A (LAD US)

Lithia Motors: Expansion of Driveway & E-commerce Platforms A Major Growth Catalyst? - Key Drivers

Lithia Motors has presented its first quarter of 2024 results in an interesting landscape of transition and growth, marked by significant...

Baptista Research

Lithia Motors: Initiation Of Coverage - A Story Of UK Market Growth Through The Pendragon Acquisition

This is our first report on automotive retailer, Lithia Motors. The company had a strong Q4 2023, with revenues growing by 11% from last year to...

Baptista Research

AutoNation Drops from the Race

On 17 October, Autonation Inc (AN US) also withdrew its proposal for Pendragon PLC (PDG LN). Lithia's deal is likely to obtain shareholder's...

Jesus Rodriguez Aguilar

Proposals, Sweetened Offers & Synergies

The game is on with the sweetened offer from Lithia, valued at 35.4p/share (24.5p divi + stake in Pinewood). Pendragon's shares are trading just...

Jesus Rodriguez Aguilar

Hedin and Lithia Struggle for Pendragon

On 22 September, Hedin submitted a revised offer at 32p (4.1x EV/NTM Fwd EBITDA, in line with the median of UK comparables). If Lithia wants to...

Jesus Rodriguez Aguilar

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