AutoWallis: Turnaround in profitability still pending
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We have updated our DCF model and earnings estimates following the latest quarterly results. As a result, we are lowering our 12-month target price to HUF 198, while maintaining our Buy recommendation. The Distribution Business Unit has faced significant profitability challenges this year, driven by delays in market launch of certain models, re-branding issues, and inventory write-downs. These factors have led us to cut our profit forecast for the current year. In addition, last year’s acquisitions have resulted in higher-than-expected costs.
On a more positive note, the European car market indicates improvements, with CEE markets — where AutoWallis operates — showing above-average growth. This trend could support a stronger performance in 2026, when the impact of recent acquisitions will begin to normalize.
In response to the Distribution BU’s difficulties, management has initiated measures aimed at improving profitability. While the quantitative impact of these actions remains uncertain, we expect rationalization efforts to focus primarily on personnel expenses and services.
Following the model update, we expect single-digit CAGR (8.2%) and EBITDA growth of ~10% over the forecast period. These growth assumptions remain broadly unchanged; however, the anticipated recovery in profitability has been pushed further out. Our revised model excludes any future acquisitions, implying revenue could exceed HUF 590 billion by 2029, with EBITDA surpassing HUF 33 billion. These figures fall short of management’s targets, largely due to the absence of further acquisition-driven growth in our assumptions.
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