FREE

Autohellas | Gearing up for further growth

Leading car rental company with diversified business model – Autohellas is the Hertz franchisee for Greece and 8 other European countries enjoying market leading positions in its territory. Contrary to other car rental companies, Autohellas has a quite diversified business model, offering both short-term car rental (RaC) and long-term leasing while also engaging in auto car trade. This smoothens out the seasonality of tourism-dependent RaC revenues increasing the visibility of the income stream while bolstering utilization rates. Autohellas is thus exposed to both cyclical (corporate demand) and structural drivers (tourism, penetration of leasing in SMEs), while being one of the few stocks to play the secular theme of Greek tourism growth.

Solid track record of margin expansion and rising returns – The group has a solid track record having posted c20% sales CAGR over 2013-2021 and similar EBIT CAGR. This stems from both organic and acquisition-driven growth, as Autohellas has transformed from a local rental company into a multi-national Hertz franchisee. The group has a very efficient structure enjoying industry-leading margins (EBIT margin for its rental business at c23% in 2021, similar to best-in-class peers of greater size) and has proven its ability to address the cost base during recessionary periods and to “de-fleet” during downturns. Thanks to its high margins, lean structure and network/scale advantages, Autohellas has been able to also deliver top-notch returns (ROE>20% in 2022e).

… and a c9% EBIT CAGR profile in 2022-25e – Following an exceptional 2021 (EBIT 28% higher than pre-COVID levels) and a stellar 2022e (EEe EBIT +34% yoy), we envisage quite a solid profit growth profile for Autohellas (9% CAGR over 2022-25e), underpinned by healthy prospects for Greek tourism (3.5-4% growth through to 2030e), proliferation of long-term leasing among SMEs and rising utilization rates. This is quite a compelling proposition in stark contrast to the significant drop in profitability envisaged for other international car rental companies given macro headwinds in the EU/US and normalizing industry conditions (e.g. second-hand car market slowdown).

Low leverage and balance sheet optionality – Despite the heavy fleet investment (gross capex c€780m since 2017), Autohellas retains low gearing (net debt/EBITDA c2x) thanks to its solid cash flow generating capacity underpinned by the high margins and the network/working capital efficiencies. As a result, contrary to the situation in the industry, with most firms using leverage on top of securitized debt being backed by vehicle assets, Autohellas’s total net debt is c90% of the vehicle net book value (net debt/vehicle just €130m operating CF, more than covering its fleet capex needs. This means there is ample room for the group to step up cash returns or to pursue more aggressive expansion.

Valuation – Despite the hefty >70% total return vs pre-COVID levels, the valuation remains subdued at