VOW3-DEU - Embedded Expectations Analysis - 2018 09 24
Volkswagen Aktiengesellschaft (VOW3:DEU) currently trades near historical highs relative to UAFRS-based (Uniform) Assets, with a 1.1x Uniform P/B. At these levels, the market has muted expectations for the firm, and management has concerns about production levels in Europe, cash flows, and cost managementSpecifically, management may lack confidence in their ability to leverage their IT infrastructure to improve productivity, and may be concerned about elevated Capex levels driven by improvements in their production efficiencies. Additionally, they may lack confidence in their ability to maintain elevated production levels in Europe, particularly given new WLTP standards implemented in August. Furthermore, they may be concerned about losses attributed to shutdown days in their German plants, and may lack confidence in the sustainability of momentum in China. Also, they may lack confidence in their ability to improve their underperforming cash flows, and maintain current EBIT and fixed cost levels
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