TEAM | 250 GTO

TEAM | 250 GTO

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02/19 04/19 06/19 08/19 10/19 12/19 02/20 04/20 06/20 08/20 10/20 12/20

INITIATION OF COVERAGE14th February 2020

HOLDYEAR-END TARGET PRICE € 158.45

14th February price €159.75Downside -0.81%Dividend Yield 0.7%Total Shareholder Return -0.1%

Source: Thomson Reuters Eikon, Team Elaboration

INVESTMENT SUMMARY

FERRARI AT A GLANCE

INDUSTRY OVERVIEW

COMPETITIVE POSITIONING

FINANCIAL ANALYSIS

VALUATION RISKS

CARS & SPARE PARTSREVENUES € 2,926 bn

n° of Units Shipped 10.131

ENGINESREVENUES € 0,198 bn

Maserati V8 3.0 6l Engine

BRANDREVENUES € 0,538 bn

Other Revenues € 0,104 bn

DIVISIONS

FERRARI AT A GLANCE

INDUSTRY OVERVIEW


FINANCIAL ANALYSIS

VALUATION RISKS

7.000

8.000

9.000

10.000

11.000

2015 2016 2017 2018 2019 2020 2021 2022

43,72%

34,45%

13,87%

7,96%

48,32%

28,63%

14,81%

8,25%EMEA

Americas

Rest of APAC

Mainland China,Hong Kong, Taiwan

2015 2019

REVENUE & CAR SHIPMENTS

UNITS SHIPPED (by year)

2.0802.926

4.095219

198

128

441

538

691

114

104

139

2015A 2019A 2022E

Other

Sponsorship,Commercial and Brand

Engines

Cars & spare parts

UNITS SHIPPED (by area)

REVENUE BREAKDOWN

FERRARI AT A GLANCE

INDUSTRY OVERVIEW


FINANCIAL ANALYSIS

VALUATION RISKS

MAIN COMPETITORS

CARS

SEGMENTS ICONAavg price €1.7m

Monza SP1Monza SP2

SPECIAL SERIESavg price €350k

488 Pista Series

GRAN TURISMOavg price €210k

GTC4SeriesPortofino

Roma

SPORTavg price €320k

812 SeriesF8 Series

SF90 Stradale

0

50

100

150

200

250

300

350

400

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015A 2016A 2017A 2018A 2019A 2020E 2021E 2022E

€ th

ousa

nds

Sport & Special Series GT Icona Average Price

FERRARI AT A GLANCE

INDUSTRY OVERVIEW

FINANCIAL ANALYSIS

VALUATION RISKS

GROWTH KEY DRIVERSPrice

Brand AwarenessInnovation

Design

STRATEGYLaunch of The Ferrari SUV

Parent Box Tax RegimeElectric engines (faster than ICEs)

60% of hybrid cars by 2022Controlled growth

Official Ferrari aftersales Department

INTANGIBLESBrand awarenessHigh visibilityExclusivityLong-term value resilience

FINANCIALSNo demand elasticity for price

Controlled growthFinancial Services

Payments in advance(for the Sp1 & Sp2 models)

PRODUCTION PROCESSHigh level of personalisation

High tecnologiesDiversification

CUSTOMERS & SALESNear-to-zero ciclicalityStrong client loyaltyWaiting listHNWC base


THE FUTURE

FUTURE CHALLENGESEnvironmental standards

R&D costs to soarCompetitors new launches

Trade-off driving emotions/sustainability Environmental issues

Preservation of exclusivityGrowth of the aftersales market

SWOT ANALYSIS

FERRARI AT A GLANCE

INDUSTRY OVERVIEW


FINANCIAL ANALYSIS

VALUATION RISKS

STRENGTHS

Strong brand image

Strong integration of performance with image, leveraging track expertise

Exclusivity created desire

Innovation & technology as key drivers

OPPORTUNITIESGrowth in the global market for high-performance supercars due to growing economies and developing nations

Increasing customer base through adding more family orientated vehicles

Development of technology

WEAKNESSESFerrari business model, based on scarcity, hinders growth and scales possibilities

Due to the ”waiting list” Ferrari may lose out on customers to the competition

Performance and speed so built into Ferrari it is costly to maintain

THREATSAutomotive policies being pushed by countries & continents

Tough competition from other iconic supercar brands such as Lamborghini

Competing brands do not follow Ferrari low volumes strategy hence they sell more and capture a large market share

FERRARI AT A GLANCE

INDUSTRY OVERVIEW


FINANCIAL ANALYSIS VALUATION RISKS

Cars and spare parts 75-80% of total revenue

HNWI growth, pricing, segments mix

CAGR 2015-2019 = 7.2%

CAGR 2020-2022 (expected) = 11.5%

Overall CAGR 2015-2022 = 8.5%

REVENUES & GROWTH

EBITDA MARGIN

Highest by far in the automotive industry, in line with luxury

Expected to get very close to the luxury outlier Hermes in 2022

Growth driven by sales increase, gross profit improvement (Icona) and fix

costs control20%

25%

30%

35%

40%

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

2015 2016 2017 2018 2019 2020 2021 2022

€ bi

llion

Revenues EBITDA EBITDA Margin

2,1 2,2 2,5 2,5 2,9 3,2 3,5 4,1 0,2 0,3

0,4 0,3 0,2

0,2 0,2

0,1

0,4 0,5

0,5 0,5 0,5

0,6 0,6

0,7

0,1 0,1 0,1 0,1

0,1 0,1

0,1

0,1

-

1,0

2,0

3,0

4,0

5,0

6,0

2015 2016 2017 2018 2019 2020 2021 2022

€ bi

llion

Cars & spare parts Engines Sponsorship, Commercial and Brand Other

FINANCIAL ANALYSIS

FERRARI AT A GLANCE

INDUSTRY OVERVIEW



PROFITABILITY

€ 1,1

€ 1,6

€ 2,1

€ 2,6

€ 3,1

€ 3,6

€ 4,1

€ 4,6

€ 5,1

2015 2016 2017 2018 2019 2020 2021 2022

10%

15%

20%

25%

30%

35%

40%

45%

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

2015 2016 2017 2018 2019 2020 2021 2022

€ bi

llion

EBIT Invested Capital ROIC

2017-2019 period facilitated by Patent Box positive impact

2018-2022 suffer higher investment level (higher D&A)

Overall growth driven by EBITDA increase and share buybacks (accretion)

EPS

From 2018 higher level of invested capital, not yet converted into sales

(lower Invested Capital turnover)

ROS increase

FINANCIAL ANALYSIS

SOLVENCY

FERRARI AT A GLANCE

INDUSTRY OVERVIEW



-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0

2016 2017 2018 2019 2020 2021 2022

€ bi

llion

Beginning Cash FCFO Delta Debt + Interests Delta Equity + Dividends Ending Cash

Very generous operating cash flows, despite higher level of capital

expenditures

Share buybacks financed issuing new debt

Increasing dividends

Important overall cash generation

Very high debt level post spin-off

Decrease of NFP (thanks to above mentioned cash generation), slower from

2018 due to higher capital expenditures and shares buybacks

Growing EBITDA

-

0,50x

1,00x

1,50x

2,00x

2,50x

3,00x

0,0

0,5

1,0

1,5

2,0

2,5

2015 2016 2017 2018 2019 2020 2021 2022

€ bi

llion

Net Financial Position EBITDA NFP/EBITDA

CASH GENERATION

FINANCIAL ANALYSIS

FERRARI AT A GLANCE

INDUSTRY OVERVIEW



DCF VALUATION

WACC

30.738 5,20% 5,40% 5,60% 5,80% 6,00% 6,20% 6,40% 6,60% 6,80% 7,00% 7,20%

4,00% 44005 37701 32974 29297 26356 23949 21943 20247 18792 17532 16429

4,10% 47925 40534 35114 30969 27697 25048 22860 21022 19456 18107 16931

4,20% 52630 43839 37559 32850 29187 26257 23860 21862 20172 18723 17467

4,30% 58380 47744 40381 34982 30853 27593 24955 22775 20944 19384 18040

4,40% 65567 52431 43673 37418 32727 29078 26159 23771 21781 20097 18654

4,50% 74808 58159 47564 40230 34851 30738 27491 24862 22691 20867 19313

4,60% 87129 65319 52233 43509 37278 32605 28970 26062 23683 21700 20023

4,70% 104379 74525 57940 47385 40079 34720 30623 27388 24770 22607 20790

4,80% 130254 86800 65073 52037 43346 37138 32483 28862 25965 23595 21620

4,90% 173379 103984 74244 57722 47207 39929 34591 30509 27286 24678 22523

5,00% 259628 129761 86472 64828 51841 43184 37000 32362 28755 25869 23508

Term

inal

Gro

wth

Rat

e

WACC

158 5,20% 5,40% 5,60% 5,80% 6,00% 6,20% 6,40% 6,60% 6,80% 7,00% 7,20%

4,00% 229,83 195,92 170,48 150,70 134,88 121,93 111,14 102,01 94,18 87,40 81,47

4,10% 250,93 211,16 182,00 159,70 142,09 127,84 116,07 106,18 97,76 90,50 84,17

4,20% 276,24 228,94 195,16 169,82 150,11 134,35 121,45 110,70 101,61 93,81 87,05

4,30% 307,17 249,95 210,34 181,29 159,07 141,54 127,34 115,61 105,76 97,37 90,14

4,40% 345,84 275,17 228,05 194,40 169,16 149,53 133,82 120,97 110,26 101,20 93,44

4,50% 395,56 305,99 248,98 209,52 180,58 158,45 140,98 126,84 115,16 105,34 96,99

4,60% 461,85 344,51 274,10 227,17 193,64 168,50 148,94 133,30 120,50 109,83 100,81

4,70% 554,66 394,04 304,81 248,02 208,71 179,88 157,84 140,43 126,34 114,71 104,93

4,80% 693,87 460,08 343,18 273,05 226,29 192,89 167,84 148,36 132,78 120,02 109,40

4,90% 925,89 552,54 392,53 303,63 247,06 207,90 179,18 157,22 139,89 125,85 114,26

5,00% 1389,94 691,22 458,32 341,87 272,00 225,42 192,14 167,19 147,78 132,26 119,56

Term

inal

Gro

wth

Rat

e

SHARE PRICE

Enterprise Value € 30.738m

- Net Financial Position € 1.184m

-Pension Liabilities € 96m

-Non controlling interests € 7m

Equity Value € 29.451m

Shares Outstanding 185.865.925

Value per Share € 158,45

DATA (in €m) 2020E 2021E 2022E NORMALIZED TERMINAL VALUE

FCFO461 449 614 573 35.205

Discounted FCFO434 399 513 - 29.392

SENSITIVITY ANALYSES ON EV AND SHARE PRICE

COMPANY NAME EV/EBITDA EV/EBIT

Ferrari 32,46x 43,91x

Richemont 13,25x 20,75xKering 14,82x 17,51xBurberry Group 12,82x 18,78xMoncler 19,25x 24,20xTiffany 18,72x 25,11xLVMH 14,40x 20,03xHermès 27,75x 31,72xBMW 9,10x 17,35x

Average 16,26x 21,93x

Median 14,61x 20,39x

Richemont

Kering Burberry

Moncler Tiffany

LVMH

BMW

15,00

20,00

25,00

30,00

35,00

40,00

45,00

7% 12% 17% 22% 27% 32% 37%

EV/E

BIT

EBIT Margin

FERRARI AT A GLANCE

INDUSTRY OVERVIEW



MULTIPLES VALUATION

SHARE PRICE

Ferrari EBIT 2020E € 942m

Hermes EV/EBIT 31,72xEnterprise Value € 29.883m - Net Financial Position € 1.184m

-Pension Liabilities € 96m

-Non controlling interests € 7m

Equity Value € 28.596m

Shares Outstanding 185.866.925

Value per Share € 153,86

FERRARI AT A GLANCE

INDUSTRY OVERVIEW


FINANCIAL ANALYSIS

VALUATION RISKS

RISK MATRIXhi

gh

L K J

IMPA

CT

med

ium

I N M AB

H

D P E F Q

low

O R C G

S

low mediumLIKELYHOOD

high

RISK

R&D A

Hybrid technology B

Competitors C

Brand Awareness D

Formula1 Team E

Emissions F

Forex G

Tax & Tariffs H

Design I

Purosangue J

Stocks & Dividends K

Car Recalls L

Controlled Growth M

Emerging Countries N

Licences O

Suppliers P

Maserati Q

Conflicts of interest R

Financial Services S

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02/19 04/19 06/19 08/19 10/19 12/19 02/20 04/20 06/20 08/20 10/20 12/20

INITIATION OF COVERAGE14th February 2020

HOLDYEAR-END TARGET PRICE € 158.45

14th February price €159.75Downside -0.81%Dividend Yield 0.7%Total Shareholder Return -0.1%

Source: Thomson Reuters Eikon, Team Elaboration

Documents

TEAM | 250 GTO