Volkswagen Pref (VOW3 GR/VOWG GR): Prefs/Ords: Buy/Buy – priced for the pain, not the gain

Research evidence excerpt

Volkswagen Pref (VOW3 GR/VOWG GR): Prefs/Ords: Buy/Buy – priced for the pain, not the gain

prove c200bp h-o-h. Lower restructuring may help (it was a Free float (prefs/ords) 100% / 10%

EUR1bn headwind in H1), but there is a raw material headwind to deal with. That leaves a 3m ADTV (USDm) (prefs/ords) 114 / 10

better H2 for Audi (which just lowered guidance), lower CO₂ provisions, and further FINANCIALS AND RATIOS (EUR)

payback on prior restructuring as the key tailwinds. Higher BEV penetration and further Year to 12/2025a 12/2026e 12/2027e 12/2028e

HSBC EPS 13.35 15.26 21.81 28.43headcount reduction gives us comfort on the latter two, but Audi leaves us somewhat HSBC EPS (prev) 13.35 16.67 23.42 30.16

nervous. A lot rests on the success of admittedly many new products (A2, A3, Q7, Q9). Change (%) 0.0 -8.5 -6.9 -5.8

Consensus EPS 11.47 18.01 22.70 26.22

VW’s self-help story is only just beginning (again). In terms of negotiations and plans, Source: LSEG IBES, HSBC estimates

VW has embarked on another round of talks to adjust its cost base to mitigate the

>EUR10bn of “new” headwinds it faces since the prior agreement struck with workers in Michael Tyndall*, CFA

Senior Global Autos Analyst

late 2024. Management appeared to confirm on the Q2 call that the ambition for this new HSBC Bank plc

programme, aside from a significant reduction in complexity, is a 50k reduction in michael.tyndall@hsbc.com

+44 20 3359 6301

headcount. Details are, for now, limited but we have put a notional amount for restructuring

in our valuation. To our minds VW is doing everything it should to combat the current auto Pushkar Tendolkar* Global Autos Analyst

backdrop – lower capacity, cut overhead, grow premium, leverage China IP, and reduce HSBC Securities and Capital Markets (India) Private