Porsche AG: Comparison is not reason

Porsche AG: Comparison is not reason
Porsche AG: Comparison is not reason

The listing of the German manufacturer has not yet managed to excite investors.

A few days ago, Porsche reported quarterly results that were received lukewarmly. It is above all the expectations which disappoint: the turnover for 2024 should barely change compared to 2023, while the operating margin should decrease significantly.

Last month, management had already tried to prepare the ground by emphasizing that investments in the production of electric vehicles would compress profitability. Porsche is betting big on this category, but the bet is no longer entirely in keeping with the times.

After unleashing passions, electric vehicles almost act as a foil now. Their sales are falling everywhere and the valuations of American “pure players” have collapsed; even the big manufacturers are going backwards.

Naturally, comments on the valuation differential between Porsche and Ferrari are rife. The first exchanges at x16 its profits, the second at x51 its profits. From there to wanting to bet on a catch-up, there is only one step that some investors would be tempted to take.

However, and we were already careful to emphasize this a few months after its IPO, Porsche is not Ferrari. Already, its capital remains completely locked: Volkswagen holds 75.4%, the Piëch family 12.5%, and the Qatari sovereign fund 5%; suffice to say that the float is here reduced to almost nothing.

Then, the industrial strategies of the two manufacturers differ greatly. Ferrari broke away from Stellantis while Porsche’s production system remains attached to that of Volkswagen. Oliver Blume is also the managing director of both groups.

Their market positioning, finally, has nothing to do with it. Ferrari is an authentic luxury player, whereas Porsche remains one player among others in the high-end segment. Drawing a parallel with the fashion sector, a teasing analyst likened the first to Hermès and the second to Hugo Boss.

True luxury comes first and foremost from exclusivity. However, the German manufacturer builds twenty times more vehicles than the Italian, and it sells them at an average price twice as low.

Finally, exposure to the Chinese market – a Source of risk or opportunity depending on your perspective – is also twice as important at Porsche as at Ferrari.

Taken together, these elements largely justify the valuation gap between the two. They should be taken into account when we focus on the sharp discount of the Porsche Automobil Holding SE holding company.

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