reports
- Ahmed Soliman
BUDGET AB | Trading at demanding valuation; Downgrade to UW
Wide valuation gap to global peers unjustified. We raise our TP by 11.1%, on: i) DCF rollover, and ii) 50bps lower WACC amid global monetary easing dynamics, while reducing our average FCFF forecasts by 10% over our forecast horizon, on higher expected capex needs. We downgrade our rating to Underweight from Neutral, following the 42% share price rally, since Mar-20, in line with the Saudi market. Budget Saudi’s current valuation ignores the negative impact of the adverse macro dynamics on the c...
- Ahmed Soliman
Maintain Neutral on meagre growth outlook
Raise TP by 20%, on lower cost of capital assumptions. We maintain our Neural rating on the stock, but raise our TP by 20% to account for: i) 1.5pp lower risk free rate assumption to 2.5%, as we reflect the global monetary easing dynamics, and ii) DCF rollover. Budget Saudi trades on a 2020e P/E of 12.9x, in line with global peers adjusted for growth, leaving limited upside from the current level. Fleet, earnings growth to remain subdued in the short run, recover modestly in the medium to long ...
- Ahmed Soliman
Upgrade to Neutral on valuation grounds; remain cautious on risks
Upgrade to Neutral on share price drop, deleveraging. We upgrade our rating to Neutral given the 16.7% share price drop y-t-d. We maintain our DCF-EV unchanged at SAR2.1bn, but raise our TP by 4.2% (based on the adjusted number of shares post the 1:6 share dividends in April 2017) to reflect the cSAR100mn of net debt reduction in 4Q16. Budget trades on a 2017e P/E of 9.6x, c23% below global peers, which we justify through its unfavourable risk profile and its subpar EPS growth of 3.8% over 2016-...
- Ahmed Soliman
Growth challenges ahead; initiate at Underweight
Expensive on our earnings estimate. We initiate coverage on Saudi car rental company Budget, with an Underweight rating. Budget trades on a 2017e P/E of 12.9x; 2.1% above industry peers, despite a 2016-18e EPS CAGR of 1.0% vs. 6.7% for peers. We do not expect Budget’s plans to up exposure to lower-priced rentals via ‘Payless’ to offset the hit on its main segments, and in our view, the share price reflects unrealistic growth in light of deteriorated Saudi fundamentals.
Ford Equity International Rating and Forecast Report
Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind...
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