Parsing The Porsche IPO

A SOTP Valuation Analysis of the Porsche/Volkswagen Complex.

Disclaimer

Value Situations is NOT investment advice and the author is not an investment advisor.

All content on this website and in the newsletter, and all other communication and correspondence from its author, is for informational and educational purposes only and should not in any circumstances, whether express or implied, be considered to be advice of an investment, legal or any other nature.  Please carry out your own research and due diligence.

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Regular readers will know one of the main areas of focus for me in public equities are idiosyncratic and event-driven special situations, and I believe the upcoming Porsche IPO is one of the most intriguing (and complex) special situations in European equity markets at present. I previously highlighted the situation back in Weekly Bulletin #5, but with the IPO now imminent I thought it timely to return to it again, with a detailed valuation analysis of the situation for paid tier subscribers.

The Porsche marque is 100% owned by Volkswagen AG and much of the market commentary has focused on how Volkswagen’s current market cap of ~€88bn is very close to the upper-end of the €70bn - €85bn targeted valuation for Porsche at IPO. The obvious implication here is that the market is ascribing little or no value to VOW’s extensive and highly valuable stable of marques, which include not just Volkswagen but also Audi, Lamborghini, Bentley, Skoda, SEAT, Ducati and Traton (Scania, MAN and Navistar trucks and commercial vehicles). Such an anomalous apparent valuation suggests this is a compelling value situation but there are nuances to it, including a fairly complex backstory and ownership structure.

In this issue of the newsletter, I set out my valuation analysis for the various Volkswagen and Porsche-related public securities and outline what I believe is the best way to play the upcoming IPO.