AutoWallis: Target price set at HUF 180
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Signs of a turnaround have emerged for gold and silver, and a strong upward move could trigger the next upward wave. A breakout above the key downtrend lines could also be on the horizon, which would further reinforce the positive turnaround. The price of oil has broken below the 100-day moving average, weakening the bullish outlook, and with the uptrend broken, it has entered a correction phase. Natural gas is showing a correction following a sharp decline, but has not yet managed to break through its downtrend line. Copper continues to trade within a wide range and is approaching the lower end of that range. Following a significant decline, wheat and corn prices have reached key support levels from which an upward correction—or even a new uptrend—is likely to begin.
FX - Technical Analysis
The dollar's momentum has eased, but confirming a trend reversal would require a decisive bearish session against the euro. Against the British pound, however, the exchange rate remains in an uptrend. EUR/HUF continues to trade within a narrowing range, while the dollar remains in an uptrend against the forint. USD/JPY has broken out to the upside from its consolidation pattern, suggesting further upside potential. EUR/CHF previously broke below a key support level that had defined its uptrend, and the pair is now characterized by a downtrend.
After updating our model, we set a 12-month price target of 180 forints and a Buy recommendation on AutoWallis. The company has published a new 5-year plan this year and is continuing on its acquisition path, announcing another significant acquisition in the Czech Republic in November following its first Czech transaction in the spring. The recent deal is not yet included in our model due to limited public information available but we expect it to be accretive.
With new car sales declining in Europe and the major manufacturers struggling to maintain profitability in the face of increasing competition, the automotive market environment poses many challenges for the company. This is also a headwind for dealers. It is therefore important that AutoWallis completes two major acquisitions this year and continues to grow in size, which will help to improve efficiency. The strategic focus on expanding the higher-margin Mobility services business unit and the implementation of business developments (e.g. the opening of a Renault-Dacia showroom in Budapest this year) will allow the company to maintain a profit growth dynamic above the industry average.
The figures for 24Q3 were not very impressive: although sales were up (+9%), profits were significantly down YoY (EBITDA: -30%, net profit: -51%). However, the mobility business was a positive element as it became profitable for the first time this year, with a high EBITDA margin of 50%. In the long term, this business will need to be expanded if AutoWallis is to increase its profit margin.
We expect a mid-single-digit CAGR for revenue and EBITDA over the forecast period, so that, excluding acquisitions, revenue could exceed HUF 500bn and EBITDA could exceed HUF 25bn by 2029. Free cash generation could exceed HUF 10bn from 2026 onwards.
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