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Alquiber: Start small, think big

 

The success of a family–owned company

Alquiber is a family–owned company that went public on July 11th, 2018. Its business is focused on the hiring of commercial vehicles to corporates and self–employed under the flexible rental form. After its acquisition in 2009 and subsequent restructuring, the management pursued an expansion strategy that has delivered impressive results: Sales increased +31.0% 2013–2017 CAGR, to €37.8mn, EBIT +46.1%, to €4.8mn, and net profit +45.5%, to €2.4mn. The total fleet was composed of 6,770 vehicles in 1H18.

Benefiting from the economic scenario

Both the traditional and the flexible rental (whose main difference is the possibility to return the car without penalisation) are closely related to the evolution of the economy. We estimate that each 1pp the economy grows, the renting market increases its total fleet by 3–5pp.We still expect Spain’s GDP to increase +2.3% in 2019e and +2.1% in 2020e implying +13.5% and +12.8.9% rise for the total fleet.

The management, the best asset

The Chairman was the co–founder of the company bought by Northgate, the largest competitor, in 2002 and has more than 40 years of experience. The CEO and the managing director surpass 15 and 30 years of experience. Their knowledge of both the business and the clients has allowed them to design a differentiated strategy: client–centric, implying higher range vehicles and more services included for similar prices than peers, and the coordinated management of the vehicle during its life cycle: purchase, hiring and disposal.

The 2020 goal: 10,000 vehicles

The company’s objective is to reach 10,000 vehicles in 2020e (+20.5% CAGR) and widen its hire–locations network to 20 from the current 12, which will probably be surpassed. We estimate that sales, EBIT and net profit may reach €67.9mn (+29% CAGR), €10.5mn (+29%) and €5.0mn (+28%), respectively.

The risks to profitability

An economic downturn and a rise in interest rates are the main threats. The first risk could even lead to an excess liquidity situation, due to the P&L–free cash flow dynamics. We consider that hikes in interest rates could be translated into prices as its highly–leveraged peers should also raise theirs.