European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Heineken NV produces and distributes beverages internationally. The Company produces beers, spirits, wines, and soft drinks under various brand names.

<ul>
<li>The discounts to NAV of covered holdcos have all tightened during November. Discounts to NAV: C.F.Alba, 47.1% (vs. 47.8%); GBL, 34.9% (vs. 35.5%); Heineken Holding, 14.5% (vs. 14.9%);</li>
<li>Industrivärden C, 4.9% (vs. 6%); Investor B, 14.6% (vs. 16.5%); Porsche Automobile Holding, 39.9% (vs. 40.9%). The spread of Rio DLC tightened to 17.2% (vs. 21%).</li>
<li>What seems interesting: holding trades, Heineken Holding vs. Heineken, Porsche SE/vs. listed assets and the Rio DLC: long RIO LN/short RIO AU.</li>
</ul>


The discounts to NAV of covered holdcos have all tightened during November. Discounts to NAV: C.F.Alba, 47.1% (vs. 47.8%); GBL, 34.9% (vs. 35.5%); Heineken Holding, 14.5% (vs. 14.9%);
Industrivärden C, 4.9% (vs. 6%); Investor B, 14.6% (vs. 16.5%); Porsche Automobile Holding, 39.9% (vs. 40.9%). The spread of Rio DLC tightened to 17.2% (vs. 21%).
What seems interesting: holding trades, Heineken Holding vs. Heineken, Porsche SE/vs. listed assets and the Rio DLC: long RIO LN/short RIO AU.


Selected European HoldCos and DLC: November’23 Report

Equity Bottom-Up

Siemens Energy AG operates as a renewable energy company. The Company offers power generation and transmission, technical consultancy, and operation and maintenance services. Siemens Energy serves customers worldwide.

<ul>
<li>Siemens Energy plans to bring back the wind business (Siemens Gamesa Renewable Energy) to profitability by fixing quality issues in onshore and driving ramp-up in offshore. Break-even is expected in 2006.</li>
<li>The restructuring process continues after four years of losses, €2 billion net loss is expected for FY 2024. The top Spanish financials institution have turned off the credit tap recently.</li>
<li>The visibility on the end of wind losses remains very limited with execution risk, so I would apply 0.9x P/BV and be short the stock, TP €9.76.</li>
</ul>


Siemens Energy plans to bring back the wind business (Siemens Gamesa Renewable Energy) to profitability by fixing quality issues in onshore and driving ramp-up in offshore. Break-even is expected in 2006.
The restructuring process continues after four years of losses, €2 billion net loss is expected for FY 2024. The top Spanish financials institution have turned off the credit tap recently.
The visibility on the end of wind losses remains very limited with execution risk, so I would apply 0.9x P/BV and be short the stock, TP €9.76.


Ferrovial SA is an infrastructure operator and industrial company. The Company operates in multiple countries in a range of sectors including construction, airport, toll road, and municipal services.  Ferrovial SA also has a services division in which they provide facility management, infrastructure maintenance and upkeep, and energy and waste management services.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ferrovial-sa" target="_blank" data-smartkarma-citation="entities:21031:1" rel="noopener">Ferrovial Sa (FER SM)</a> announces the sale of its 25% stake in Heathrow Airport Holdings for £2,368 million (valued at zero in its books), far exceeding my valuation of €1,617 million.</li>
<li>With the operation, Ferrovial will be able to invest in more lucrative new infrastructure projects than Heathrow (a mature asset). Ferrovial is focused on growth in North American greenfield projects.</li>
<li>The divestment should have a positive impact of 4.7% on Ferrovial's consensus target price, which increases to €34.55/share vs. €33/share previously, which implies a revaluation potential of 9.5%.</li>
</ul>



Ferrovial Sa (FER SM) announces the sale of its 25% stake in Heathrow Airport Holdings for £2,368 million (valued at zero in its books), far exceeding my valuation of €1,617 million.
With the operation, Ferrovial will be able to invest in more lucrative new infrastructure projects than Heathrow (a mature asset). Ferrovial is focused on growth in North American greenfield projects.
The divestment should have a positive impact of 4.7% on Ferrovial's consensus target price, which increases to €34.55/share vs. €33/share previously, which implies a revaluation potential of 9.5%.


Vitesco Technologies Group / Event-Driven

Vitesco Technologies Group Aktiengesellschaft operates as a supplier of drive technologies and electrification solutions for sustainable mobility. The Company product range includes electrification solutions such as electrified drivetrain systems, battery management and thermal management solutions, as well as electronic control units, sensors and actuators.

<ul>
<li>On 27 November, <a href="https://www.smartkarma.com/entities/schaeffler-ag" target="_blank" data-smartkarma-citation="entities:21712:1" rel="noopener">Schaeffler (SHA GR)</a> increased the cash consideration for <a href="https://www.smartkarma.com/entities/vitesco-technologies-group-ag" target="_blank" data-smartkarma-citation="entities:36684:1" rel="noopener">Vitesco Technologies Group (VTSC GR)</a> by 3.3% to €94.00/share, an implied equity value of €3,762 million, implied EV of €3,416 million.</li>
<li>Although this may not include a takeover premium, and optically the multiple seems low at 3.4x EV/Fwd NTM EBITDA, I update my TP to €94. </li>
<li>A higher counteroffer or another sweetening seems unlikely. I believe it should not be difficult for Schaeffler to achieve 75% acceptances, thus the deal will likely go through.</li>
</ul>


On 27 November, Schaeffler (SHA GR) increased the cash consideration for Vitesco Technologies Group (VTSC GR) by 3.3% to €94.00/share, an implied equity value of €3,762 million, implied EV of €3,416 million.
Although this may not include a takeover premium, and optically the multiple seems low at 3.4x EV/Fwd NTM EBITDA, I update my TP to €94. 
A higher counteroffer or another sweetening seems unlikely. I believe it should not be difficult for Schaeffler to achieve 75% acceptances, thus the deal will likely go through.


Schaeffler/Vitesco: Sweetened Offer Considered Low by the Board

Porsche Automobil Holding  / Event-Driven

Porsche Automobil Holding SE is a holding company. The Company, through its subsidiaries, offers development, production, and sale of automobiles along with financial services. Porsche operates worldwide.

<ul>
<li>My updated SOTP shows that <a href="https://www.smartkarma.com/entities/porsche-automobil-holding-se" target="_blank" data-smartkarma-citation="entities:21691:1" rel="noopener">Porsche Automobil Holding (PAH3 GR)</a> is trading at a still massive 41.2% discount/NAV, implying that Porsche SE is liable for c. €6.5 billion legal claims, maybe too harsh.</li>
<li>Recent rulings have been favourable. The discount is partly due to capital allocation leaning towards debt servicing. Porsche SE is trading at 2024e 2.6x Fwd P/E and 7.3% dividend yield.</li>
<li>Porsche SE presents an attractive opportunity to gain exposure to Volkswagen and Porsche AG through a discounted and levered investment. Discount to NAV should systematically decrease.</li>
</ul>


My updated SOTP shows that Porsche Automobil Holding (PAH3 GR) is trading at a still massive 41.2% discount/NAV, implying that Porsche SE is liable for c. €6.5 billion legal claims, maybe too harsh.
Recent rulings have been favourable. The discount is partly due to capital allocation leaning towards debt servicing. Porsche SE is trading at 2024e 2.6x Fwd P/E and 7.3% dividend yield.
Porsche SE presents an attractive opportunity to gain exposure to Volkswagen and Porsche AG through a discounted and levered investment. Discount to NAV should systematically decrease.


Porsche Automobile Holding: Q3 and Discount

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Jesus Rodriguez Aguilar
European Event-Driven Analyst

Selected European HoldCos and DLC: November’23 Report

Discounts to NAV of covered holdcos tightened in November. Interesting trades, in my view, include Heineken Holding vs. Heineken, Porsche SE vs....

Jesus Rodriguez Aguilar

Siemens Gamesa Still Poses High Risks

Siemens Energy aims to make its wind business profitable by addressing quality issues and increasing offshore operations. Gamesa is still facing...

Jesus Rodriguez Aguilar

Taking off from Heathrow

Ferrovial Sa sells its stake in Heathrow Airport Holdings for £2,368 million, leaving behind a headache while allowing for investment in more...

Jesus Rodriguez Aguilar

Schaeffler/Vitesco: Sweetened Offer Considered Low by the Board

Schaeffler increases the cash offer for Vitesco Technologies Group to €94/share, which although not generous at 3.4x EV/ NTM EBITDA, makes the...

Jesus Rodriguez Aguilar

Porsche Automobile Holding: Q3 and Discount

Porsche SE trades at 41.2% discount/NAV, possibly due to €6.5 billion legal claims. Recent rulings have been favorable, making it an attractive...

Jesus Rodriguez Aguilar

Selected European HoldCos and DLC: November’23 Report

​Discounts to NAV of covered holdcos tightened in November. Interesting trades, in my view, include Heineken Holding vs. Heineken, Porsche SE vs....

Jesus Rodriguez Aguilar

Siemens Gamesa Still Poses High Risks

​Siemens Energy aims to make its wind business profitable by addressing quality issues and increasing offshore operations. Gamesa is still facing...

Jesus Rodriguez Aguilar

Taking off from Heathrow

​Ferrovial Sa sells its stake in Heathrow Airport Holdings for £2,368 million, leaving behind a headache while allowing for investment in more...

Jesus Rodriguez Aguilar

Schaeffler/Vitesco: Sweetened Offer Considered Low by the Board

​Schaeffler increases the cash offer for Vitesco Technologies Group to €94/share, which although not generous at 3.4x EV/ NTM EBITDA, makes the...

Jesus Rodriguez Aguilar

Porsche Automobile Holding: Q3 and Discount

​Porsche SE trades at 41.2% discount/NAV, possibly due to €6.5 billion legal claims. Recent rulings have been favorable, making it an attractive...

Jesus Rodriguez Aguilar

Discounts to NAV of covered holdcos tightened in November. Interesting trades, in my view, include Heineken Holding vs. Heineken, Porsche SE vs....

Siemens Energy aims to make its wind business profitable by addressing quality issues and increasing offshore operations. Gamesa is still facing...

Ferrovial Sa sells its stake in Heathrow Airport Holdings for £2,368 million, leaving behind a headache while allowing for investment in more...

Schaeffler increases the cash offer for Vitesco Technologies Group to €94/share, which although not generous at 3.4x EV/ NTM EBITDA, makes the...

Porsche SE trades at 41.2% discount/NAV, possibly due to €6.5 billion legal claims. Recent rulings have been favorable, making it an attractive...