AutoWallis: Target price set at HUF 180
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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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