PIERER Mobility — Strong momentum into H220

PIERER Mobility (AV: PMAG)

Last close As at 19/04/2024

81.00

1.00 (1.25%)

Market capitalisation

2,738m

More on this equity

Research: Industrials

PIERER Mobility — Strong momentum into H220

PIERER management have confirmed strong market demand for its powered two-wheeler (PTW) product portfolio since lockdowns have lifted. H220 management guidance is for revenue growth compared to H219 and we have increased our EPS estimates by c 2% for FY21, primarily reflecting higher than anticipated e-bike sales.

Andy Chambers

Written by

Andy Chambers

Director, Industrials

Industrials

PIERER Mobility

Strong momentum into H220

Half year trading update

Automobiles & parts

23 July 2020

Price

€48.6

Market cap

€1,094m

Net debt (€m) as at 31 December 2019

396

Shares in issue

22.5m

Free float

38%

Code

PMAG

Primary exchange

SIX Swiss Exchange

Secondary exchange

Frankfurt Stock Exchange

Share price performance

%

1m

3m

12m

Abs

14.9

80

(7.9)

Rel (local)

11.8

66

(12.4)

52-week high/low

€60.00

€25.00

Business description

PIERER Mobility (previously KTM Industries) is a leading manufacturer of powered two wheelers, focusing on premium motorcycles and two-wheeled electric vehicles. With its well-known brands – KTM, Husqvarna and GasGas – it is the largest sports motorcycle manufacturer in Europe.

Next event

H120 results

30 August 2020

Analysts

Andy Chambers

+44 (0)20 3681 2525

PIERER Mobility is a research client of Edison Investment Research Limited

PIERER management have confirmed strong market demand for its powered two-wheeler (PTW) product portfolio since lockdowns have lifted. H220 management guidance is for revenue growth compared to H219 and we have increased our EPS estimates by c 2% for FY21, primarily reflecting higher than anticipated e-bike sales.

Year end

Revenue (€m)

EBIT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/18

1,462

128.7

1.82

0.30

26.7

0.6

12/19

1,520

131.7

2.42

0.00

20.1

N/A

12/20e

1,441

72.8

1.01

0.30

48.1

0.6

12/21e

1,710

134.5

2.11

0.30

23.0

0.6

Note: *EBIT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Robust performance despite COVID-19 effects

Unit sales of motorcycles and e-bikes fell by 8% in H120 to 124,682 (H119: 135,711). The drop reflects lower KTM and Husqvarna motorcycle brand sales by Indian partner Bajaj Auto due to the severe impact of COVID-19 in the sub-continent, where unit sales fell 12,379 or 38% to 20,160. Excluding Bajaj sales, motorcycle and e-bike sales actually rose by 1.3% to 104,522 units (70,171 and 34,351, respectively), although volumes include initial GasGas motorcycle sales. Management expect H120 revenues of c €600m, 20% below H119 (€754.9m), generating a modest EBIT of €1.7m (H119 €46.5m). Since the end of lockdowns in many territories, PTW demand has been strong, which may be attributable to changed attitudes to private versus public forms of transport. Global motorcycle sales grew by 4% in H120, with North America up 20% and Australia up 39%. KTM and Husqvarna brands both grew market share and PIERER has responded by increasing production to above pre-lockdown levels and adding staff.

Market strength augurs well for FY21

The underlying strength of the market should lead to a strong H220 performance. Management expects sales to exceed €800m, more than 4.5% above H219 revenues of €765.3m. FY20 sales are expected to be more than €1,400m. The ebikes activity is now expected by management to contribute over €110m to sales, €10m above our estimate, which we have now raised to match guidance. We do not expect this to increase FY20 EBIT and maintain our previous assumption. The growth in demand for e-bikes and the general positive recovery for powered two-wheeler markets should continue in FY21, although COVID-19 remains a risk to the assumption in some markets. With the sales growth expected to continue from the higher base in FY21, our EPS estimates increase by around 2%.

Valuation: Return to growth anticipated

The share price has recovered strongly, reflecting the expectation that the previous growth trajectory can be attained. The move into urban mobility markets should augment the core business share gains, warranting the P/E ratio rating premium.

Earnings estimate revisions

We have increased our revenue estimates by €10m to reflect the stronger than expected e-bikes performance, and the strength from the higher base carries through to FY21. While this only has a modest impact on earnings in FY21, it is nevertheless encouraging given the robust recovery being seen in the core motorcycle business following the COVID-19 shutdowns.

Exhibit 1: PIERER Mobility revised estimates

Year to 31 December

2020e

2021e

€m

Prior

New

Change

Prior

New

Change

Core Motorcycle business

1330.8

1330.8

0.0%

1577.8

1577.8

0.0%

E-motorcycles

0.0

0.0

0.0

0.0

E-bikes

100.0

110.0

10.0%

120.0

132.0

10.0%

Total revenues

1430.8

1440.8

0.7%

1697.8

1709.8

0.7%

Core Motorcycle business

387.1

387.1

0.0%

460.9

460.9

0.0%

E-motorcycles

0.0

0.0

0.0

0.0

E-bikes (PEXCO)

15.0

15.0

0.0%

21.6

23.8

10.0%

Total gross profit

402.1

402.1

0.0%

482.5

484.7

0.4%

Operating expenses

202.0

202.0

0.0%

212.4

212.4

0.0%

EBITDA

200.1

200.1

0.0%

270.1

272.3

0.8%

D&A

-127.2

-127.2

0.0%

-137.8

-137.8

0.0%

EBIT

72.8

72.8

0.0%

132.3

134.5

1.7%

PBT

57.3

57.3

0.0%

118.1

120.5

2.0%

Net Income

22.7

22.7

0.0%

46.7

47.6

2.0%

EPS (€)

1.01

1.01

0.0%

2.07

2.11

2.0%

Dividend (€)

0.30

0.30

0.0%

0.3

0.30

0.0%

Adjusted net debt

385

380

-1.4%

368

361

-1.9%

Source: PIERER Mobility reports, Edison Investment Research estimates

Management has already decided not to pay a dividend in respect of FY19 as part of the mitigation factors aimed at preserving cash through the COVID-19 pandemic. We have adjusted our debt estimates for the €7m cash retention in FY20 this achieves. We expect a resumption of dividend payments for FY20 (at the FY18 level) despite the tougher trading year, reflecting a still good level of earnings cover as well as the strong recovery already appearing in H220.

Exhibit 2: Financial summary

Accounts: IFRS, Yr end: December, EUR: Millions

 

 

2017A

2018A

2019A

2020E

2021E

Income statement

 

 

 

 

 

 

 

Total revenues

 

 

1,354

1,462

1,520

1,441

1,710

Cost of sales

 

 

(945)

(1,031)

(1,074)

(1,039)

(1,225)

Gross profit

 

 

409

431

446

402

485

SG&A (expenses)

 

 

(128)

(194)

(191)

(176)

(185)

R&D costs

 

 

(34)

(27)

(24)

(25)

(26)

Other income/(expense)

 

 

(28)

1

10

(1)

(1)

Depreciation and amortisation

 

 

(97)

(82)

(109)

(127)

(138)

Reported EBIT

 

 

122

129

132

73

134

Finance income/(expense)

 

 

(11)

(15)

(14)

(15)

(14)

Other income/(expense)

 

 

(2)

(1)

0

(1)

0

Reported PBT

 

 

109

112

118

57

121

Income tax expense

 

 

(30)

(27)

(22)

(14)

(29)

Minorities

 

 

(39)

(44)

(41)

(21)

(44)

Reported net income (post-minorities)

 

 

40

41

54

23

48

Basic average number of shares, m

 

 

225

23

23

23

23

Basic EPS

 

 

1.98

2.99

2.42

1.01

2.11

Dividend per share

 

 

0.30

0.30

0.00

0.30

0.30

Adjusted EBITDA

 

 

219

211

241

200

272

Adjusted EBIT

 

 

122

129

132

73

134

Adjusted PBT

 

 

109

112

118

57

121

Adjusted EPS

 

 

1.77

1.82

2.42

1.01

2.11

Adjusted diluted EPS

 

 

1.77

1.82

2.42

1.01

2.11

 

 

 

 

 

 

 

 

Balance sheet

 

 

 

 

 

 

 

Property, plant and equipment

 

 

357

283

380

413

435

Goodwill

 

 

117

96

146

146

146

Intangible assets

 

 

280

327

345

345

345

Other non-current assets

 

 

28

39

17

17

17

Total non-current assets

 

 

782

745

888

921

943

Cash and equivalents

 

 

169

89

161

157

156

Inventories

 

 

297

287

324

313

351

Trade and other receivables

 

 

216

220

235

227

255

Other current assets

 

 

1

13

8

8

8

Total current assets

 

 

683

609

728

705

769

Non-current loans and borrowings

 

 

373

339

477

457

437

Other non-current liabilities

 

 

89

95

110

110

110

Total non-current liabilities

 

 

461

435

587

567

547

Trade and other payables

 

 

178

191

205

198

234

Current loans and borrowings

 

 

171

73

80

80

80

Other current liabilities

 

 

125

104

116

116

116

Total current liabilities

 

 

475

368

401

394

430

Equity attributable to company

 

 

318

297

334

350

376

Non-controlling interest

 

 

211

253

295

316

360

 

 

 

 

 

 

 

 

Cashflow statement

 

 

 

 

 

 

 

Profit for the year

 

 

84

114

96

44

92

Taxation expenses

 

 

33

29

22

14

29

Net finance expenses

 

 

4

(16)

(16)

16

14

Depreciation and amortisation

 

 

86

91

109

127

138

Movements in working capital

 

 

(23)

(83)

70

12

(30)

Interest paid / received

 

 

(13)

(15)

(12)

(16)

(14)

Income taxes paid

 

 

(10)

(36)

(10)

(14)

(29)

Cash from operations (CFO)

 

 

161

85

258

183

200

Capex

 

 

(182)

(167)

(165)

(160)

(160)

Acquisitions & disposals net

 

 

28

70

0

0

0

Other investing activities

 

 

0

(6)

(1)

0

0

Cash used in investing activities (CFIA)

 

 

(154)

(102)

(166)

(160)

(160)

Movements in debt

 

 

(96)

(38)

0

(20)

(20)

Dividends paid

 

 

(20)

(19)

(20)

(7)

(21)

Other financing activities

 

 

(2)

(6)

(1)

0

0

Cash from financing activities (CFF)

 

 

(118)

(63)

(21)

(27)

(41)

Currency translation differences and other

 

 

(4)

0

0

0

0

Increase/(decrease) in cash and equivalents

 

 

(115)

(80)

72

(4)

(1)

Cash and equivalents at end of period

 

 

169

89

161

157

156

Net (debt) cash

 

 

(375)

(323)

(396)

(380)

(361)

Movement in net (debt) cash over period

 

 

(375)

52

(73)

16

19

Source: Company reports. Edison Investment Research estimates


General disclaimer and copyright

This report has been commissioned by PIERER Mobility and prepared and issued by Edison, in consideration of a fee payable by PIERER Mobility. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by PIERER Mobility and prepared and issued by Edison, in consideration of a fee payable by PIERER Mobility. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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