1 / 98

PIAGGIO S.p.A.

Risk Analysis. Valuation. Financial Analysis. Company Overview. Why Invest in Piaggio. Automobiles & Parts. PIAGGIO S.p.A. Politecnico Student Research Global Investment Research Challenge 2011. COMPANY OVERVIEW. Why invest in Piaggio. Financial Analysis. Company Overview.

oceana
Download Presentation

PIAGGIO S.p.A.

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. RiskAnalysis Valuation Financial Analysis Company Overview WhyInvest in Piaggio Automobiles & Parts PIAGGIO S.p.A. Politecnico Student Research Global Investment Research Challenge 2011

  2. COMPANY OVERVIEW Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  3. Company Overview Wide brand portfolio Wide brand portfolio Premiumisation strategy Largest European producer of 2w and LCVs by revenues Style Business Design Reliability Mobility Sport Safety Performance Environment Young Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  4. Company Overview Internationalization strategy Production Facilities Distribution Network Joint Venture Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  5. Company Overview Latest results From Revenues to Earnings: Unit Sold Vs Management Guidelines: ActualGuidelines Delta Revenues €1,485M €1,500M -1% 1 Revenues Breakdown European Revenues (€’000) Europe India Vietnam EbitdaMargin 13.3% 13.3% 0% 360,000 2Ws EPS €0.115 €0.118 -2.5% 335,000 2Ws 220,000 LCVs 197,000 LCVs 48,000 2Ws 60,000 2Ws +11.7% +25% -7.5% Source: Company Data Source: Company Data, Politecnico Estimates Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  6. Company Overview Latest results From Revenues to Earnings: • Efficiency Improvements • Financial Savings • One-off Fiscal Items • Higher Materials Costs Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  7. Company Overview Our Rating 2010 financialresults Indiansales report • HOLD • BUY Price (03/31/11): €2.41 12 M Target Price: €2.8 Upside: 16.2% Rating: BUY Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  8. WHY INVEST IN PIAGGIO Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  9. Whyinvest in Piaggio 1. Launch of new products in India 2. Expansion in South-Eastern Asia 3. Consolidation in Europe Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  10. Whyinvest in Piaggio: New products in India 3w Market volumes : 1M u (2010) Market growth: 8% (2011E) Piaggio volumes: 220,000 u (2010) Piaggio growth: 13.5% (2011E) 10% 25% Launchof Vespa: 2012E Piaggio volumes: 75,000 u (2013E) 18% 24% 23% 4w Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  11. Whyinvest in Piaggio: Expansion in Asia Vietnam Indonesia Malaysia Potential Market: 3M vehicles Potential Market: 11M vehicles Thailand Taiwan Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  12. Whyinvest in Piaggio: Consolidation in Europe Eco Friendly Solutions: European EBITDA Margin +155bps by 2013 Piaggio Market Share: 20% Piaggio Volumes: 335,000 units (2010) • Improvementof global sourcing position • Production plantsrationalisation • Synergies in the distribution network Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  13. FINANCIAL ANALYSIS Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  14. Financial Analysis Income Statement 2010 E 2011 E 2012 E 2013 E BalanceSheet 7.6% Revenue CAGR 10-13 2010 2011 E 2012 E 2013 E €1485M €1615M €1745M €1850M Debt €528M €500M €470M €440M Div. & Buy Back Capex ∆NFP ∆NWC OCF + 160bps EBITDA margin Cash&other €155M €148M €147M €147M 3.3% From DMs 14.8% From EMs ~ €310M ~€530M NFP €350M €342M €318M €288M 11.9% EBITDA CAGR 10-13 €197M €218M €249M €276M Equity €443M €467M €499M €537M LowerD&A and Financial Charges CAGR Abilitytomeet short and long termobligations DeleveragingwhileImproving ROE 2010 2013 24.3% EPS CAGR 10-13 €0.11 €0.14 €0.18 €0.22 ~ €15M HigherthanRevenue CAGR ~ €65M Cash Flow Statement ~ €140M 8.8% OCF CAGR 10-13 €153M €155M €181M €197M Source: Politecnico Estimates Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  15. VALUATION Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  16. Valuation: DiscountedCash Flow Sum-of-the-part approach Two-Stage model Three-Stage model Analytical Period + Perpetuity Analytical Period + Convergence Stage + Perpetuity Source: Politecnico Estimates Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  17. Valuation: DiscountedCash Flow TP DCF EU + US India Vietnam €2.90 €0.95 €133M 13.5% 20.5% 7.5% €10M 10.72% €389M 12.9% 19.5% 42% €13M 9.31% €133M 13.5% 20.5% 7.5% €10M 10.72% Sales 2010 Sales CAGR 10-15 EBITDA margin 2010 Tax Rate FCFF 2010 WACC €963M 2.5% 9.75% 30% €33M 7.63% €963M 2.5% 9.75% 30% €33M 7.63% €1.30 €0.65 Source: Politecnico Estimates Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  18. Valuation: Multiple Analysis Piaggio’s Indian and Vietnamese businesses are comparable to its Indian peers Using the median EV/EBITDA multiple 13% discount Initiation Coverage Whyinvest in Piaggio Financial Analysis Financial Analysis Company Overview Company Overview WhyInvest in Piaggio RiskAnalysis RiskAnalysis Data and Charts Valuation Valuation

  19. Valuation: Multiple Analysis As regards the whole Piaggio Group (EV/EBITDA multiple): EMs multiple - for the Asian Business: DMs multiple - for the non-Asian Business: 9.3x 4.4x Target Price: € 2.62 Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  20. Valuation: Target Price 70% weight € 2.90 DCFAnalysis: MultipleAnalysis: Year-end Target Price: (upside> 15%) 30% weight € 2.62 € 2.80 Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  21. RISK ANALYSIS Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  22. Riskanalysis: Riskmatrix Riskanalysis: Risksfrom Asia • Unsuccessful • product launches • Stronger competition • Exchange rate risk • Unsuccessful • product launches • GDP growth rates • Increase in energy, • rawmaterials and • components costs • Stronger competition Likelihood • Exchange rate risk Impact Source: Politecnico Estimates Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  23. Riskanalysis: Riskmatrix Riskanalysis: Risksfrom Asia • Unsuccessful • product launches • Unsuccessful • product launches • Stronger competition • Stronger competition • Exchange rate risk • Exchange rate risk Source: Politecnico Estimates Source:Pacific Exchange Rate Service Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  24. Riskanalysis: Riskmatrix Riskanalysis: Global risks • Stronger competition • GDP growth rates • Exchange rate risk • Unsuccessful • product launches • GDP growth rates • Increase in energy, • rawmaterials and • components costs Likelihood • Increase in energy, • rawmaterials and • components costs Impact Source: Politecnico Estimates Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  25. Riskanalysis: Riskmatrix Riskanalysis: Global risks • GDP growth rates • GDP growth rates • Increase in energy, • rawmaterials and • components costs • Increase in energy, • rawmaterials and • component costs Source: Company data Source: International MonetaryFund, World Economic Outlook Database Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  26. Riskanalysis: Montecarlo Simulation P = 80% €2.97 €2.62 €2.65 €2.75 €2.80 €2.82 €2.87 €2.67 €2.70 €2.72 €2.77 €2.90 €2.92 €2.95 €2.85 Source: Politecnico Estimates Price Confidence Interval: (€ 2.70 ; € 2.90) Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  27. Riskanalysis: Montecarlo Simulation 1.35 1.34 1.32 1.33 1.31 1.30 0.86 1.29 0.79 0.84 0.85 0.88 0.64 1.20 1.26 0.64 0.70 0.76 0.87 0.89 0.90 0.63 0.66 0.67 1.18 1.19 1.22 1.23 1.24 1.25 1.28 0.61 0.62 0.63 0.66 0.67 0.68 0.69 0.72 0.73 0.74 0.75 0.78 0.65 1.21 1.27 0.65 0.71 0.77 Source: Politecnico Estimates 74% of volatility comes from Asia Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  28. Questions Questions Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Valuation

  29. RiskAnalysis Valuation Financial Analysis Company Overview WhyInvest in Piaggio Automobiles & Parts PIAGGIO S.p.A. Politecnico Student Research ICFAS Investment Research Challenge 2011

  30. Data and Elaborations Competitive Scenario: Financial Statements: Risks: Company: • MainCompetitors • EU Scenario • India Scenario • US Scenario • Vietnam Scenario • On The Stock Market • 2010 Results • OWC • Stock OptionsPlan • Tax Rate • Sales’ Seasonality • SpareParts • Aprilia and Moto Guzzi • BalanceSheet • Income Statement • Cash Flow Statement India • Cash Flow Statement EU • Cash Flow Statement ASEAN • Ratios • ROE • Hedging Policy • CostsBreakdown • Corr. Oil , Rub, All. • Sensitivity on Oil Price • Sensitivity India • Sensitivity ASEAN • SensitivityEurope • Politicalrisk – India 1 • Politicalrisk – India 2 • Japan’s earthquake • Interest RatesRisk • MS: Assumptions • MS: Impact • MS: Results • Sensitivity on steel Macro Scenario: • India • Vietnam • Indonesia • Malaysia • Thailand • Summary • GDP growth rates Debt: • DebtStructure • Altman Z-Score Strategy: • StrategicLevers • Premiumisation • BrandDiversification • Launchof Vespa • New UrbanVehicles DCF Model: • Assumpt. Macro Scenario • Assumpt. CostInflation • Terminal Value • WACC Market: • From 3w to 4w • Electric and Hybrid • Indian 4w • Margins in 2w • MotorcycleIndustry • Outlook Acquisitions: CG and CSR: Multiples: • CG Snapshot • BoardofDirectors • CG and CSR Valuation • Piaggio as a Prey • PotentialBuyers • Piaggio’s Acquisitions • EMs and DMsMultiples • Piaggio Peers • Historical P/E • P/E Future Evolution Whyinvest in Piaggio Financial Analysis Company Overview RiskAnalysis Data and Charts Data and Charts Valuation

  31. Piaggio on the stock market FTSE Italia MidCap MARKET CAP: € 923.98 M • TTM Daily Average: • 1.18 millions shares • (equal to 2.5-3 €M) Source:Bloomberg, Politecnico Estimates Data and Charts Data and Charts

  32. 2010 Results Slightlybelowconsensus, but positive underlyingtrends. • Volumes: European 2Ws: IndianLCVs: ASEAN 2Ws: 335kActualVs 355kExpected 220kActualVs 195kExpected 60k ActualVs 48kExpected • EbitMargin: 7.5%. In linewithconsensus (+50bps from 2009) • Interests: €27.3M. In linewithconsensus (- €3M from 2009) • Tax Rate: 48.9%.Higherthanconsensun (+12.9% from 2009) • EPS: €0.115. In linewithconsensus (substantially in linewith 2009) Data and Charts

  33. Operating WorkingCapital: Millions Millions XXX Data and Charts Source: Bloomberg, Politecnico Estimates

  34. Piaggio’s Stock OptionPlan • Stock Option Plan approved on 07 May 2007 and updated on 25 January 2010 • The Board of Directors is responsible of the Stock Option Plan • Max 10,000,000 of granted Stock Options equal to 2.52% of the share capital • The Stock Options are European style options EXERCISE PERIOD 0 3 5 Grant Date/Commencement Date Vesting Date Expiration Date Data and Charts Data and Charts

  35. TaxRates Piaggio’s taxratesbyregion: Piaggio’s taxesnotbased on taxableincome: Source: Politecnico Estimates Piaggio’s aggregate tax rate: 44% Data and Charts

  36. Seasonality in Piaggio’s sales Peak in the Europeanspringtime. • Seasonal fixed-term contracts. • Peaks’ impact on OWC is: Data and Charts Data and Charts

  37. Spare parts segment 10% of Total Revenues in 2010 • Highermarginality • StrategicforLCVs in India • New logistics center in Pontendera (Italy) Data and Charts Data and Charts

  38. Aprilia and Moto Guzzi • Two significant brands for Piaggio linked to: • increasing importance of motorbikes in the European market: a trend that has begun since the early ‘90 Substitution trend in Europe (‘000 units) Source: Acem • needtoenrich and complete Piaggio’s branddiversification • Piaggio’s largeinvestments in 2010 forthem • synergieswith Piaggio distribution network Data and Charts Data and Charts

  39. Piaggio StrategicLevers Internationalization Premiumization • New markets • New products • New plants • Design • Environment • Safety • Innovation • Robustness CostEfficiency Outsourcing and SCM • Improvementof global sourcing position • Production PlantsRationalization • Sinergies in Distribution Network • Production ofengines • Centralizedlogistic center for the spareparts business Data and Charts

  40. Premiumisation strategy Piaggio’s prices are higherthanitscompetitors: customersrecognizehigherquality and uniquesolutions. Data and Charts Data and Charts

  41. Branddiversification Wide Brand Portfolio Wide RangeofCustomers Data and Charts Data and Charts

  42. Launch of Vespa: India vs Vietnam Distribution network already present… …but for LCVs distribution Larger organizational structure (Piaggio India has its own CEO) Piaggio’s R&D department improved Vespa to better target the Indian’s customers Vespa gained a successful commercial presence in India: ..in 1960, Rahul Bajaj obtained the license to produce the Vespa in India, till 1970 when the Indian government revoked the license. Now Piaggio has better fundamentals to compete in India in respect to the ‘80s and ‘90s. XXX Data and Charts Source:Indian news, Politecnico Estimates

  43. New types of vehicles: urbanmobility • Scooter MP3: • launched in October 2007 • 72,000 units sold so far • hybrid models since 2009 • Car prototype NT3: • November 2010 (Milan Motor Show) • launch expected in 2012-13 • three-seat city car XXX Data and Charts Source: News, Politecnico Estimates

  44. Piaggio as a Prey • WHAT DOES A PREDATOR GET? • Business: 2W and LCV in Europe. • 2W, 3W and 4W in India. • 2W in ASEAN. • Market Share: 20% in 2W Europe • 40% in 3W, 4% in 4W India Niche player in 2W ASEAN • Revenues: €1,485M in 2010 (~$2,065M) • Leverage: 1.2x • AT WHAT PRICE? • Market Cap: ~€895M (~ $1,245M) • Ownership:ImmsiS.p.a. (53% share) • Fees ~€20M • Premium topayfor the deal (+25%) ~€220M ~€420M • PubblicOffertoMinorityShareholders • (compulsory in the Italianorder in case of • acquisitionof the controlstake) ~€470M • Market Valueof the ControlStake Best Case: €600M Worst Case: €1,130M Data and Charts

  45. PotentialBuyers INDIAN CONGLOMERATE COMPANIES: Automotive Business: Commercial Vehicles and Personal Vehicles. Market Share: 1% in Indian 3W LCVs and 31% in 4W. Revenues: Rs184,520 M (~$4,095M) Market Cap: $7,740M Leverage: 0.14x Recentacquisitions: SsangyongMotors (Korean Premium SUV manufacturer ) Automotive Business: Commercial Vehicles and Personal Vehicles. Market Share: 57% in indian 4W LCVs. Revenues: Rs918,934 M (~$20,390M) Market Cap: $14,803M Leverage: 1.0x Recentacquisitions: Jaguar and Land Rover (2008) BENEFITS FROM ACQUIRING PIAGGIO: • Premium Brands + Technology Transfer • Entry in 2W • Entry in Western Markets • Consolidation in Indian Market Data and Charts

  46. Piaggio’s acquisitions Piaggio’s pastacquisitions: • Leader in motorbikes • Largebrand portfolio • In the future Piaggio willnotmakeacquisitions: • accordingtoitsstrategy; • there are notpotentialtakeovertargets. Forexample: Data and Charts Data and Charts

  47. Piaggio’s maincompetitors EUROPEAN COMPETITORS INDIAN COMPETITORS Data and Charts Data and Charts

  48. Competitive scenarios: EU Data and Charts Data and Charts

  49. Competitive scenarios: India Data and Charts Data and Charts

  50. Competitive scenarios: the US Strong impact of the economiccrisis. 60% reduction in volumes Piaggio’s market share in scooter market: 30% (6,700 vehicles) Scooter segment: 5% of total in 2010, down from 12% in 2007 March 8°, 2011, Piaggio US changedits CEO: Paolo Timoni > Miguel Martinez Market withverypeculiarrequirements and customerneeds. Data and Charts Data and Charts

More Related