123fahrschule, Intel, Mercedes-Benz - Between disruption and evolution: New business models in focus

123fahrschule SE: Germany's largest driving school chain benefits from market consolidation and digitization

The driving school industry is optimistic about the future: according to a report by the MOVING e.V. association, 30% of the driving schools surveyed expect sales to increase in 2024, with 13% even expecting growth of over 10%. More than half of the companies (53%) expect stable sales. Only 15% of driving schools expect a decline in sales, which underlines the overall positive mood in the industry. Nevertheless, the market is consolidating as countless active driving instructors have not arranged their succession.

As the digital market leader, 123fahrschule SE benefits from this development. With 56 locations and a clear expansion strategy, the Company is well-positioned to benefit from the expected market consolidation. The Company forecasts revenues of EUR 22-24 million and an adjusted EBITDA of EUR 1 million by the end of 2024.

Currently, a driver education program costs around EUR 3,000 - EUR 4,500. The high failure rate of up to 50% in theoretical driving tests opens up new opportunities for operators. From 2025, half of the theory lessons can also be taken online and up to 10 of 35 driving lessons can be completed in a simulator. CEO Boris Polenske is therefore focusing on the driving simulator. This frees up the valuable time of driving instructors and practical lessons can be conveniently completed on the premises of the driving school. What prospective pilots experience in the flight simulator high in the air also applies to learner drivers in simulated road traffic. This digitalization gives 123fahrschule a cost advantage over traditional driving schools, of which over 90% generate less than EUR 500,000 in annual revenue.

The digital infrastructure and the use of simulators enable 123fahrschule to increase the quality of training while optimizing costs for driving students. The Company recorded revenues of EUR 20.6 million in 2023 and significantly improved its EBITDA to EUR -887,000. Profitability is targeted by the end of this year.

The growth strategy of 123fahschule is based on three pillars:

• Expansion of the driving school business in cities with over 150,000 inhabitants
• Training of driving instructors (currently 10% market share)
• Integration of the simulator manufacturer Foerst GmbH

There is also a 14-day money-back guarantee for subscribers. Parents and driving school students can be pleased that a company like 123fahrschule is bringing a breath of fresh air to the driving school market. Investors can benefit from the permanent demand and the intelligently designed process of the highly digitized educational institution. The share is traded over the counter at the Düsseldorf Stock Exchange under ISIN DE000A2P4HL9. It is currently trading at EUR 2.60.

Intel leaves Dow Jones after 25 years - Transformation shows first signs of success

The chip company Intel is currently undergoing a major transformation and is leaving the Dow Jones Industrial Index after 25 years. Despite the symbolic setback and a share price loss of 67% since 2021, the latest quarterly figures show the first signs of a successful realignment.

Industry insiders report that several tech giants are interested in taking it over. In addition to Apple, which already took over Intel's modem division in 2019, Samsung is also said to be considering an acquisition or merger. The rumors are fueled by Intel's current market capitalization, which makes a takeover more attractive after the sharp drop in the share price. Samsung, in particular, is seen as a promising candidate for a potential transaction. Whether there is any truth to the rumors or if Intel deliberately spread them, the Q3 2024 report reveals major restructuring within the group:

• Revenue: USD 13.3 billion, above analyst expectations
• Outlook Q4: USD 13.3-14.3 billion revenue
• Adjusted EPS for Q4 expected at USD 0.12
• Cost savings of USD 10 billion planned for 2025

"Our Q3 results underscore the solid progress we are making in simplifying our portfolio and increasing efficiency," emphasizes CEO Pat Gelsinger. In particular, the new Lunar Lake chip generation and the foundry business with Intel 18A technology are showing positive developments.

With its foundry services (IFS), Intel is building a second strategic pillar: as a contract manufacturer, the group makes its state-of-the-art production facilities available to other companies that develop their own chips but lack manufacturing capacity. The new Intel 18A technology is intended to serve as a driving force here, attracting customers such as large technology companies, smaller chip designers and automotive manufacturers.

Although market capitalization has fallen by USD 200 billion since 2021 to USD 22.5 per share, improved margins on new products and growing interest from foundry customers suggest the potential for recovery. The transformation from a pure processor manufacturer to a contract manufacturer appears to be bearing fruit. In the third quarter, the Company generated USD 4.1 billion in cash from operating activities and paid dividends of USD 0.5 billion. Intel shares (ISIN US4581401001) are trading at EUR 20.72

Mercedes-Benz struggles with market weakness and transformation costs

Mercedes-Benz recorded a significant drop in profits in the third quarter of 2024. Operating profit fell from EUR 3.4 billion to EUR 1.2 billion, while the return on sales fell from 13.5% to 4.7%. The main reasons for this are the weak business in China and the high investments in e-mobility. Consumer demand is also limited. In addition, Mercedes-Benz is pursuing a high-price strategy and preferably serves the luxury segment.

The e-transformation of the automotive industry is also evident in the jobs: According to Prognos-Study a further 140,000 jobs will be lost - in addition to the 46,000 jobs already cut since 2019.

Mercedes-Benz Group Chief Financial Officer Harald Wilhelm is focusing on cost reductions and efficiency increases. The financial basis remains stable with a free cash flow of EUR 2.39 billion and a net liquidity of EUR 28.73 billion. The share buyback program is going as planned with EUR 4.3 billion so far.

For the full year 2024, Mercedes-Benz expects a slight decline in revenue and unit sales. The share of electrified vehicles is expected to increase to 18–19%. The fourth quarter is encouraging: new premium models such as the G-Class, the AMG E-Class, the AMG GT and the SL are expected to provide momentum. The return on passenger vehicles is expected to be between 7.5% and 8.5%. The share (ISIN DE0007100000) stands at EUR 55.83.

123fahrschule SE is positioning itself as a digital pioneer in a fragmented EUR 2.75 billion market. The upcoming digitalization of driver training from 2025 plays perfectly into the hands of the business model. With 56 locations, the integration of simulator manufacturer Foerst and a focus on large cities, the growth strategy is clearly defined. The path to profitability seems realistic with a forecast of EUR 22-24 million in sales and EUR 1 million in EBITDA for this year. A small, growing David in a Goliath market eliminates the sometimes endless commute for driving students by allowing them to participate in theory lessons online via Zoom/Teams. Mercedes-Benz faces challenges: the slump in profits to EUR 1.2 billion in Q3/2024 shows the challenges posed by the China business and electrification. However, the solid financial position with EUR 28.73 billion in net liquidity and the ongoing share buyback program provide stability. Focusing on the luxury segment and new models in the fourth quarter could boost returns again. Chipmaker Intel is showing the first signs of success of its transformation despite leaving the Dow Jones. Quarterly figures above expectations and planned cost savings of USD 10 billion by 2025 point to a turnaround. The speculation of a takeover by Apple or Samsung could provide additional upside potential. The new chip generation and the growing foundry business show that the realignment is taking effect.