An IPO to Watch and Why: Aston Martin

The name’s Martin, Aston Martin.

For all the fast car loving James Bond fans, here’s an IPO to think about taking for a spin.

I have always been a fan of the timeless elegance of a DB9, and even more impressed with the handling of the Vantage S on a race track in Vegas four years ago.

Personally, I am excited for this IPO and it’s not just because I love their cars. I’m excited because Mercedes Benz owner Daimler, listed on the world’s 10th largest stock exchange (Frankfurt Stock Exchange), actually owns a 4.9% share in Aston Martin. Will they become more AMG Mercedes than Aston Martin?

Side note: With Aston Martin’s IPO and Mercedes entering the electric car space (or as Mercedes says “Electric now has a Mercedes”) this could see a much needed uplift in Daimler’s stock (DAI). This could also mean an uplift in the DAX which is a blue chip index tracking the 30 major companies in Germany listed on the Frankfurt stock exchange — think S&P 500 for Germany.

It’s not just their cars that are timeless, Aston Martin is shaping up to be a company that stands the test of time. Despite having been bankrupt seven times, their moto, much like the motivational quotes that trend on Instagram is: “Fail seven times, stand up eight”.

After 105 years, they’ve finally announced their plans to list on the FTSE (London Stock Exchange) this year, following seven consecutive quarters of profitability and reaching record sales and profit highs in their recent half year results.

CEO Andy Palmer told Reuters they’re working to avoid repeating some of their previous mistakes.

“If one looks at the lessons from the past where we’ve had millionaires and billionaires buying us, investing in one car and then walking away and that’s created the problems,”
“We need to be in good governance for the next 100 years and … having an independent board, selecting that independent board because of their deep experience in running the boards of huge public companies I think is absolutely key.”

In light of this, Penny Hughes, who has previously worked at FTSE companies Vodafone (VOD.L) and supermarket WM Morrison (MRW.L), will become Aston’s non-executive chair of the board when the IPO takes place.

As for the numbers:

Revenues climbed by 14% in the opening half of the year, hitting £449.9 million, and pre-tax profits rose from £20.1 million to £20.8 million helped by growing demand in Asia which now accounts for 16% of their sales and the launch of three new sports car lines.

The firm reported a 24% pre-tax profit margin, once the costs of preference shares and other measures were removed from consideration.

They expect to sell 6,200 to 6,400 cars this year, rising to 7,100 to 7,300 next year, climbing to 9,800 in 2020 once a new production plant is completed. The company plans to make 14,000 cars per year in the long run through both the original Aston Martin badge and the relaunch of its Lagonda brand as a luxury electric car maker.

The plans for listing later this year will be at an expected £5 billion valuation. This could mean Aston Martin will race on up to be included in the FTSE 100 which is a blue-chip index tracking the top 100 companies listed on the London Stock Exchange, known as the Financial Times Stock Exchange — FTSE).

Let’s see if their public stock can handle like their cars do!

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