European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Porsche Automobil Holding  / Event-Driven

<ul>
<li>Net debt improved by around €1 billion to c. €5.8 billion. Prioritising deleveraging and allocations to new venture investments over dividends seem to have a negative impact on valuation.</li>
<li>Porsche SE is viewed as a holding company of Volkswagen Group, which should warrant a discount of 15%-25% on the stock, instead of the massive 44.6% discount to NAV.</li>
<li>Assuming a typical company holding discount of 15-25% range, the current share price indicates Porsche SE is liable for the whole c. €6.5 billion legal claims.</li>
</ul>


Net debt improved by around €1 billion to c. €5.8 billion. Prioritising deleveraging and allocations to new venture investments over dividends seem to have a negative impact on valuation.
Porsche SE is viewed as a holding company of Volkswagen Group, which should warrant a discount of 15%-25% on the stock, instead of the massive 44.6% discount to NAV.
Assuming a typical company holding discount of 15-25% range, the current share price indicates Porsche SE is liable for the whole c. €6.5 billion legal claims.


Preference for Deleveraging, Model Update

<ul>
<li>The Discounts to NAV of covered holdcos have mainly widened during February. Discounts to NAV: C.F.Alba, 47.1% (vs. 47.5%); GBL, 37.7% vs. (37.1%); Heineken Holding, 16.5% (vs. 16.6%); </li>
<li>Industrivärden C, 4.4% (vs. 3.8%); Investor B, 5.6% (vs. 7.9%); Porsche Automobile Holding, 43.7% (vs. 42%). The spread of Rio DLC widened to 25.6% (vs. 25.2%).</li>
<li>What seems interesting: Porsche SE/vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).</li>
</ul>


The Discounts to NAV of covered holdcos have mainly widened during February. Discounts to NAV: C.F.Alba, 47.1% (vs. 47.5%); GBL, 37.7% vs. (37.1%); Heineken Holding, 16.5% (vs. 16.6%); 
Industrivärden C, 4.4% (vs. 3.8%); Investor B, 5.6% (vs. 7.9%); Porsche Automobile Holding, 43.7% (vs. 42%). The spread of Rio DLC widened to 25.6% (vs. 25.2%).
What seems interesting: Porsche SE/vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).


Selected European HoldCos and DLC: February’24 Report

<ul>
<li>My updated SOTP shows that <a href="https://www.smartkarma.com/entities/porsche-automobil-holding-se" target="_blank" data-smartkarma-citation="entities:21691:1" rel="noopener">Porsche Automobil Holding (PAH3 GR)</a> is trading at a still massive 41.2% discount/NAV, implying that Porsche SE is liable for c. €6.5 billion legal claims, maybe too harsh.</li>
<li>Recent rulings have been favourable. The discount is partly due to capital allocation leaning towards debt servicing. Porsche SE is trading at 2024e 2.6x Fwd P/E and 7.3% dividend yield.</li>
<li>Porsche SE presents an attractive opportunity to gain exposure to Volkswagen and Porsche AG through a discounted and levered investment. Discount to NAV should systematically decrease.</li>
</ul>


My updated SOTP shows that Porsche Automobil Holding (PAH3 GR) is trading at a still massive 41.2% discount/NAV, implying that Porsche SE is liable for c. €6.5 billion legal claims, maybe too harsh.
Recent rulings have been favourable. The discount is partly due to capital allocation leaning towards debt servicing. Porsche SE is trading at 2024e 2.6x Fwd P/E and 7.3% dividend yield.
Porsche SE presents an attractive opportunity to gain exposure to Volkswagen and Porsche AG through a discounted and levered investment. Discount to NAV should systematically decrease.


Porsche Automobile Holding: Q3 and Discount

<ul>
<li>My updated SOTP shows that the shares of Porsche SE are trading at a still massive 44.9% discount to NAV. The discount has come down from 50.8% on 28 February.</li>
<li>The shares of Porsche SE suffer from a double discount, the holding structure (with a new layer since the listing of Porsche AG) plus a non-voting discount.</li>
<li>My SOTP valuation indicates that the shares are significantly undervalued, but it is challenging to pinpoint a short-term catalyst that could realise this upside potential.</li>
</ul>


My updated SOTP shows that the shares of Porsche SE are trading at a still massive 44.9% discount to NAV. The discount has come down from 50.8% on 28 February.
The shares of Porsche SE suffer from a double discount, the holding structure (with a new layer since the listing of Porsche AG) plus a non-voting discount.
My SOTP valuation indicates that the shares are significantly undervalued, but it is challenging to pinpoint a short-term catalyst that could realise this upside potential.


Porsche Automobile Holding: H1 SOTP and Discount to NAV

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

Equity Bottom-Up

Himax Technologies Inc Adr / Equity Bottom-Up

<ul>
<li>We hosted a conference call recently with Himax management, the global leader in automotive touch display controllers; the company is experiencing a uniquely stronger automotive supply/demand environment than some peers.</li>
<li>Discussed in detail how larger or more sophisticated interior displays can drive higher dollar content of display controllers per vehicle. We examine trending new car designs with much larger displays.</li>
<li>We forecast an exponential jump-up in display controller content value per vehicle as beautiful display designs are becoming key USP for auto brands; Maintain our Structural Long rating for Himax.</li>
</ul>


We hosted a conference call recently with Himax management, the global leader in automotive touch display controllers; the company is experiencing a uniquely stronger automotive supply/demand environment than some peers.
Discussed in detail how larger or more sophisticated interior displays can drive higher dollar content of display controllers per vehicle. We examine trending new car designs with much larger displays.
We forecast an exponential jump-up in display controller content value per vehicle as beautiful display designs are becoming key USP for auto brands; Maintain our Structural Long rating for Himax.


TechChain Insights: Call with Himax, How New In-Car Displays Can Quadruple Chip Content Per Vehicle

Germany

Porsche Automobil Holding SE is a holding company. The Company, through its subsidiaries, offers development, production, and sale of automobiles along with financial services. Porsche operates worldwide.

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Porsche Automobil Holding (PAH3 GR)

Preference for Deleveraging, Model Update

Porsche SE's focus on reducing debt and investing in new ventures impacts valuation, leading to a significant discount on stock price compared to...

Jesus Rodriguez Aguilar

Selected European HoldCos and DLC: February’24 Report

Discounts to NAV of covered holdcos mainly widened in February. What seems interesting: Porsche SE/vs. listed assets and the Rio DLC (long RIO LN...

Jesus Rodriguez Aguilar

Porsche Automobile Holding: Q3 and Discount

Porsche SE trades at 41.2% discount/NAV, possibly due to €6.5 billion legal claims. Recent rulings have been favorable, making it an attractive...

Jesus Rodriguez Aguilar

Porsche Automobile Holding: H1 SOTP and Discount to NAV

My updated SOTP shows that the shares of Porsche SE are trading at a still massive 44.9% discount to NAV. The discount has come down from 50.8% on...

Jesus Rodriguez Aguilar

TechChain Insights: Call with Himax, How New In-Car Displays Can Quadruple Chip Content Per Vehicle

We discussed in depth the company's latest insights in how larger interior displays in autos are driving higher dollar content of display...

Vincent Fernando, CFA

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Preference for Deleveraging, Model Update

​Porsche SE's focus on reducing debt and investing in new ventures impacts valuation, leading to a significant discount on stock price compared to...

Jesus Rodriguez Aguilar

Selected European HoldCos and DLC: February’24 Report

​Discounts to NAV of covered holdcos mainly widened in February. What seems interesting: Porsche SE/vs. listed assets and the Rio DLC (long RIO LN...

Jesus Rodriguez Aguilar

Porsche Automobile Holding: Q3 and Discount

​Porsche SE trades at 41.2% discount/NAV, possibly due to €6.5 billion legal claims. Recent rulings have been favorable, making it an attractive...

Jesus Rodriguez Aguilar

Porsche Automobile Holding: H1 SOTP and Discount to NAV

My updated SOTP shows that the shares of Porsche SE are trading at a still massive 44.9% discount to NAV. The discount has come down from 50.8% on...

Jesus Rodriguez Aguilar

TechChain Insights: Call with Himax, How New In-Car Displays Can Quadruple Chip Content Per Vehicle

We discussed in depth the company's latest insights in how larger interior displays in autos are driving higher dollar content of display...

Vincent Fernando, CFA

Porsche SE's focus on reducing debt and investing in new ventures impacts valuation, leading to a significant discount on stock price compared to...

Discounts to NAV of covered holdcos mainly widened in February. What seems interesting: Porsche SE/vs. listed assets and the Rio DLC (long RIO LN...

Porsche SE trades at 41.2% discount/NAV, possibly due to €6.5 billion legal claims. Recent rulings have been favorable, making it an attractive...