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Based on its first half results, Aston Martin could be rated at 21.8 times adjusted to EBITDA when it reaches the top of the new range. Photo: Reuters
Aston Martin has reduced its crowded market ambitions in anticipation of its IPO this week, lowering the top of its target range by about 11%.
The new target is £ 18.50 to £ 20 ($ 24 to $ 26) per share, the luxury car maker announced on Monday in an email newsletter. Previously, the company had set a range of 17.50 to 22.50 pounds, as it sought a higher valuation than its only rated rival, Ferrari NV.
The books are covered at the new range, said the company, and trading is expected to begin on October 3 on the London Stock Exchange.
Aston Martin, made famous in James Bond films, would still enjoy a market value of about 4.54 billion pounds sterling ($ 5.9 billion) at the highest level. Analysts had previously been skeptical that the Graydon, England-based manufacturer would reach its previous target of £ 5.07 billion. The new range is getting closer to parity with Ferrari, which has shown a history of strong profitability and cash generation, and has a more robust balance sheet.
Shareholders cash months before the UK leaves the European Union. While the British post-Brexit automobile industry is one of the most exposed sectors to potential trade barriers, the company is "well isolated".
Based on its first half results, Aston Martin could be rated at 21.8 times adjusted to EBITDA when it reaches the top of the new range. The calculation does not take into account Aston Martin's debt and R & D expenses, which would push the multiples higher. According to Bloomberg data, Ferrari is trading around 20.9 times its adjusted Ebitda forecast for 2018, a figure closer to luxury goods companies than car manufacturers.
Even at a lower price, the Aston Martin IPO represents a spectacular victory for its shareholders, which is expected to increase their growth in 10 years. When Andrea Bonomi's Investindustrial acquired 37.5% stake in 2012, the automaker was worth around £ 400m, Palmer said in an interview last month. The Italian Bonomi, who owned the Ducati motorcycle manufacturer before selling it to VW in 2012, will retain a stake in Aston Martin after the IPO.
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