As Aston Martin prepares for an initial public offering, we’ve prepared a dossier taking a closer look at the recent history of the company, its performance and what to expect from the IPO.

 

A History of Elegance 

Since its inception in 1913, Aston Martin has been in the upper echelons of style and extravagance. Whether you picture James Bond in his DB5 or William and Kate driving off after their wedding in their DB6, these timeless cars provide an iconic vision of British luxury. With many other carmakers falling into foreign ownership in recent years, Aston Martin remains quintessentially British despite Kuwait’s Investment Dar, Italy’s Investindustrial and Germany’s Daimler owning an approximate 40, 37.5 and 4.9 percent stake respectively. Upon its IPO, Aston Martin will be the first UK carmaker to list on the LSE since the 80’s. The offering would be for a 25% stake of the business and it’s valuation around £5bn with an approximate cost of £24.50 per share.

Despite its reputation and prestige, Aston Martin has seen multiple changes in its controlling stake over the years and has faced bankruptcy on seven different occasions. Fortunes began to change for the luxury carmaker when they appointed Andy Palmer as CEO in 2014. Dr Palmer began revamping the company with the announcement of a 3 stage turnaround plan and since then, Aston Martin have released three new models which lead to record sales. After producing their first profits since 2010, Aston Martin has gone on to record 7 profitable quarters since.

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The Next Stage

As parts 2 and 3 of the turnaround plan come into fruition, Aston Martin are scheduled to open a new plant in Wales during 2019 which will solely handle the production of a new range of luxury SUV cars, the first for the company. The new SUV’s will be added to the range including GT cars and sedans. Aston Martin plan to launch a new model to their range every year until 2022 plus a reimagining of a classic in the ‘Heritage’ range to “recognise Aston Martin’s proud history”. To keep up with current and future trends, they also plan to release a fully electric Lagonda Marque which would be the first luxury car of this type as well as SUV’s and sedans featuring autonomous driving technology.

Currently, 30% of sales are within the UK market, 26% within the Middle East and Africa, 25% in the Americas and 16% within Asia, but with the introduction of the new SUV range, Aston Martin are hoping that boost the Asian sales to 25% of the business. Focus on Asia is due to an 8% rise in revenue due to increased demand in the region. In general, Aston Martin ensures that demand is kept larger than supply and because of this, the selling price of models has doubled in the last 10 years. Despite the traditional curb on production, Aston Martin plan to increase their output growth year after year with their new plant and new models with each of the range.

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Although many companies from varying industries are fearful for the future with Brexit and trade war concerns, Aston Martin doesn’t share this concern as they are adept in handling varying tariffs and believe that their customer base is accustomed to paying higher prices for luxury goods.

 

Comparisons with Ferrari

Many analysts and investors looking into Aston Martin are quick to look for comparisons with the recent Ferrari IPO. The Italian carmaker has gone from strength to strength since their public offering in New York and the company has seen its value grow from $10bn to $27bn since October ’17.

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Revenues for the company have also increased since the IPO bringing more strength to the company.

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However, it is worth noting that Aston Martin and Ferrari are not identical neither in terms of product or business structure and that historical IPO data is not a guaranteed indication of performance of any future IPO. Many consider Ferrari as a superior product as they attract a higher selling price, have greater retention of value on the resale market and their production costs are lower.

 

How to Get Involved

Aston Martin are due to release a prospectus on their offering on or around the 20th September with the IPO taking place shortly afterwards. Equitrade Capital will seek an allocation of shares as they hit the market and if you would like to be involved, simply call 0121 454 0770 to speak directly with a broker or click the button below to register for one of our free seminars.

 

Any opinions, news, research, analysis, prices or other information contained within this post is provided as general market commentary and does not constitute investment advice or a personal recommendation and does not take into consideration your objectives, financial situation or risk appetite. Equitrade Capital will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information. We assume no liability for errors, inaccuracies or omissions contained within these materials.

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