Volkswagen (AO) | Buy | Disposing of a part of Everllence

Research evidence excerpt

Volkswagen (AO) | Buy | Disposing of a part of Everllence

Volkswagen Buy | Target Price: EUR98.00

Company description Management

Following recent M&A activity, the VW group has evolved into a full-line provider Dr. Oliver Blume, CEO

of both light and commercial vehicles. On the back of its global activities, VW Dr. Arno Antlitz, CFO

runs an internationalised production network, giving it access to growth outside

Key shareholdersof Europe and supporting unit sales in excess of 10m mid-term. On the cost side, Free float 100.00%

architectures like MQB, MLB, and MEB represent coherent and comprehensive Qatar Holdings 15.50%

concepts, aiming at exploiting scale economies superior to those of the Waddell & Reed 4.30%

competition. BlackRock 3.60%

Investment case Valuation methodology

VW has become a show-me story with self-help potential. Our TP is derived from a 2:1 blend of a DCF model (avg. annual

Slashing jobs and potentially reducing headcount in Germany at FCF of EUR2.2bn, avg. cost of equity of 24.5%, and a 2%

an unprecedented scale sends an important signal. A perpetual growth rate) and peer multiple approach (P/E of 3.9x).

restructuring of these activities is key, since it could allow the Our valuation includes an expected value of EUR8.0bn, or EUR16

VW brand and VW Commercial Vehicles to become self-sufficient per share, for the potential damages stemming from pending

again and to boost group financials. legal claims.

In our view, management has made efforts to recalibrate the Our estimates reflect the potential impact from US import

group's strategy in electrification and digitalisation to address duties.

the weaknesses that have emerged. The issues have been Risks to our rating

addressed, but execution will take time, in our view.