ICYMI: Volkswagen is listing sports car maker Porsche to raise funds for its electric transition. Its valuation rests on how closely it can mimic peer Ferrari – and what discount should be applied to its complex governance, writes Unmack1
Porsche could one day be valued like Ferrari. It should grow annual sales nearly as quickly at between 7% and 8%, and is already far ahead in electric vehicles: battery rides are targeted at 50% of deliveries by 2025. And it hopes to exceed a 20% operating profit margin, not far off Ferrari’s 24% this year.
For now, however, Porsche deserves a discount. With an operating margin target of 17% to 18% this year, it sits almost halfway between Mercedes-Benz’s 12% and Ferrari’s 24%, as per Refinitiv forecasts. If it were to be valued similarly, almost halfway between the two companies’ valuation multiples, Porsche would trade on 19 times 2023 net income. Using the average of Berenberg and Jefferies earnings forecasts, it could be worth 92 billion euros.
Investors in all IPOs expect a discount. And Porsche also comes with some thorny issues to analyse. It will inherit Volkswagen’s own complex governance: the German group, whose supervisory board is dominated by labour representatives and public sector shareholders, will continue to own 75% of shares. The two companies will evenVW’s influence in Porsche will be diluted by Porsche SE’s stake.
That would still be a good result for Volkswagen, nearly matching the group’s current market capitalisation of 89 billion euros. Still, Porsche’s debut will probably be just a prototype of what it could one day be worth.
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