D'Ieteren Group: Re-instate with Buy rating; with scenarios that highlight five upside risks

Research evidence excerpt

D'Ieteren Group: Re-instate with Buy rating; with scenarios that highlight five upside risks

to the insurance customer increases as more claims are handled, scale is leveraged and

dependency rises. Additionally, the company’s Best of Belron annual event brings

together key suppliers and partners and drives a strong internal culture.

Revenue driver 3: Non-discretionary spend (once every 23 years in fact)

It’s important to make clear how infrequently a customer requires Belron’s services. In

Exhibit 18 we lay out a simple framing of the industry dynamics.

Exhibit 18: There’s a 4.3% chance a consumer needs a windscreen replacement or repair

equivalent to once every 23 years

Windscreen replacement and repair dynamics

Millions

Belron number of jobs 13

Market share 19%

Global number of jobs 69

Global vehicle fleet 1600

Probability of needing windscreen repair 4.3%

Frequency (years) 23

Source: Company data, BofA Global Research estimates

BofA GLOBAL RESEARCH

Based on Belron’s volume of activity and market share we estimate there are c70m

windscreen replacement and repair jobs undertaken globally each year. Given a global

fleet of around 1.6bn vehicles (estimates range from 1.3-1.9bn), this implies just over a

4% probability of needing to utilize Belron’s service. Across a lifetime of driving a typical

consumer will require 2-3 windscreen replacements or repairs. Without the repair the

vehicle is likely unusable and thus we see Belron’s offering as amongst the least

discretionary.

We see no reason to believe the frequency of stone chips hitting windscreens is set to

change and highlight Belron is exposed to the replacement and repair segment not

where a vehicle has been in a collision. It may be possible that ADAS (Advanced Driver