Mutares, 123fahrschule, Porsche SE – Incisive news

Porsche Holding SE – Strong after profit warning

After carmaker BMW issued a profit warning in mid-November and the German auto industry is in one of its worst crises in a long time, it was almost to be expected that Porsche Automobil Holding SE would cut its forecast due to a sales and profit warning at its subsidiary Volkswagen.

For the 2024 financial year, the Stuttgart-based company is now expecting a group result after taxes in the range of EUR 2.4 billion to EUR 4.4 billion. Previously, the range was expected to be between EUR 3.5 billion and EUR 5.5 billion. By contrast, the forecast for net debt of between EUR 5.0 billion and EUR 5.5 billion was confirmed.

On the other hand, investors positively noted the holding company's investment in drone manufacturer Quantum-Systems. The future-oriented company focuses on the development and production of drones used for the collection of sensor-based data as well as for surveillance and reconnaissance tasks. The Company currently has around 350 employees. Last year, the Company more than doubled its revenue and is targeting revenue of over EUR 100 million this year.

On Monday, Porsche SE shares were down 3.3% at EUR 40.88, testing the short-term upward trend. A break of this trend would likely lead to a retest of the year's lows at EUR 37.47

123fahrschule – A market leader with a clear growth story

While the German automotive industry is struggling with declining market shares (VW lost its market leadership in China), 123fahrschule has already established itself as the dominant player among nationwide driving school chains in Germany. It continues to expand rapidly, with an average growth rate of 16% since 2020. The Cologne-based company's focus is on digitization and process automation. A software stack developed in-house enables the efficient operation of a national network of driving school centers and innovative digital services for learner drivers.

The German driving school market is gigantic, worth EUR 3 billion, with around 1 million driving license tests taken each year. With their disruptive technology, the team led by Klicktel founder Boris Polenske aims to further revolutionize the market. The expansion is to be driven primarily in large cities with over 150,000 inhabitants, initially targeting Berlin, Hamburg, and Cologne. To finance its growth, the Company is planning a capital increase with a volume of around EUR 1 million, which is to be placed with selected investors at a price of EUR 2.30 per share.

The figures for the first half of 2024 just ran across the tickers. Revenues increased from EUR 10.44 million to EUR 11.06 million, while the loss increased from EUR 0.96 million to EUR 1.35 million as of June 30, 2024. By contrast, cash flow from operating activities improved by EUR 0.96 million to EUR 0.89 million. The Management Board also expects a positive business development for the second half of the year. For the full year, an adjusted group EBITDA of around EUR 1.0 million is expected.

October 14 is likely to be an important date for 123fahrschule in terms of driver training using online theory and simulators. The Federal Ministry for Digital and Transport (BMDV) is inviting industry representatives and associations to an "information event on the reform of driving school training". A decision in favour of digitization should help the Company achieve significantly higher goals in the long term.

Analysts at NuWays have already identified the potential, setting a price target of EUR 7.20 and a "Buy" rating. The current share price of EUR 2.34 corresponds to a price potential of around 208%.

Mutares – Is the mudslinging set to continue?

Last week was a real bombshell on the German trading floor. After the US short seller Gotham City published a report alleging accounting irregularities at the Munich-based company, the holding company's share price imploded by around 38% to a low of EUR 18.64.

Although the management of the SDAX-listed company tried to smooth the waves with a statement regarding the criticized business model and the discrepancies in the cash flow statement, it did not come across as a genuine attempt to break the deadlock. Even an extension of the contract of CEO Robin Laik, who holds around 25% of the shares in family ownership, by a further five years until December 31, 2029, did little to ease tensions.

In the statement, Mutares repeatedly criticized the "one-sided negative interpretation of the Mutares strategy" and explained itself with regard to the suspected discrepancies in the cash flow statement. According to a Gotham report, the cash balance of EUR 394.2 million does not match the amount of EUR 422.2 million stated in the cash flow statement. Mutares explains that this is due to a "purely editorial mistake". The discrepancy is merely the result of an error in the data transfer to the report. However, in an abridged version of the consolidated financial statements, the amount of EUR 422.2 million is correctly stated in both documents.

The investment company Mutares is facing accusations from the US short seller Gotham City. Porsche SE had to revise its forecasts downwards due to a sales and profit warning from its subsidiary Volkswagen. The analysts at NuWays see 123fahrschule as a multiplication candidate.