Hello everyone! As a long-term Kamux investor, my interest in Q3 focused on Auto1 Group, which held its IPO in Q1 2021.
segments: Auto1 Group = sells to dealers
AUTOHERO = sells directly to consumers.
Auto1 Group buys cars from consumers, etc. (Q3 approx. 160,000 cars) and sells cars to dealers across Europe.
The purpose of the IPO, however, was to start growing its own consumer brand (AUTOHERO), and just under ONE BILLION euros were raised in the IPO.
Auto1 Group operates with its AUTOHERO brand in 9 different countries:
FY 2021 revenue guidance is 4.5 - 4.6 Billion euros. The company is making a loss and has Softbank as a financier and owner, among others, so I assume it will be a growth engine for some time. The company’s own goal is to be Europe’s largest and most profitable used car seller.
For the Autohero brand, the company actively markets, and this has yielded results as Autohero is growing rapidly, and Q3 Autohero sales were already 11.3k cars; I expect the growth to continue very rapidly!
Autohero offers free home delivery, a 21-day return policy, and a one-year warranty on its cars.
The strategy includes its own processing centers, which have only recently started to be acquired (Germany 2 units (150+300+ jobs), Poland Warsaw (275 jobs), and Spain Toledo (250 jobs)). Total 975+ (552 filled in Q3).
Autohero is heavily in an investment phase, and GPU/car is 365 euros/car (merchant 772 €/car). With the help of the processing centers, the company estimates it will achieve an additional 500-700 euros / car in gross profit. The company has several other ideas to improve AUTOHERO’s profitability (e.g., in-house financing, insurance, etc.).
The capacity of the first 4 processing centers is 90k cars / year, and there are already 552 jobs there at the end of Q3 (total announced for these 4 centers is 975+, with over 300 people mentioned for Berlin). So, according to this, the current capacity could already be over 45k cars/year.
In 2022, the plan is to increase the number and capacity of processing centers and geographical reach to, I believe, an annual capacity of 150-250k cars (2023+ 400k+).
The IPO price was 38 euros, and the 2021 targets at that time have been exceeded, and the centers’ capacity is allocated for 90k, yet the share price has fallen below 20 euros…?!
Valuation: approx. 4.2 billion and revenue guidance 4.5-4.6 billion! EV/Sales below 1 and almost a billion in cash, much less debt. The cash position is strong, so that probably forgives a bit (even though money is being spent on glass trucks, marketing, and centers).
For example, Kamux, which is profitable, has an EV/Sales of approx. 0.5.
Management purchases of approx. 4 million at just under 25 euros / share (so someone in management is also down 20-25% on their last purchase… as am I, and all IPO participants are surely already almost -50% if they have held?)
What do you think, is Auto1 Group starting to be attractively priced, and can it achieve its goals and become the largest (it already is!) and most profitable (it is not now) used car dealer in Europe?
Why has the share price fallen 50% from the IPO, and are we starting to be in an attractive range?
Sentiment is also against these “story cases” right now, although it’s possible that the markets are overreacting and good buying opportunities will emerge 
