Aston Martin Lagonda (lon:aml)
Aston martin – More Positive New For The New Shareholders

Aston Martin Lagonda Financials

ItemCurrent PeriodPrevious Period
Year20202019
Period6 Months6 Months
Revenue£146m£406m
Earnings
Adjusted Earnings
EBITDA
Adjusted EBITDA(£89m)£21m
Statutory Profit(£200m)(£63m)
Adjusted Profit(£213m)(£71m)
Total Debt£751m£843m
Net Debt

Commentary History
Aston Martin Lagonda Share Price
Grade:The Black Grade - Shares That I Think Could Collapse To Nothing Or Suffer A Massive Share Issue.
Title: Aston martin – More Positive New For The New Shareholders
Company: AML - Aston Martin Lagonda
Share Price Then: 58p
Author: Ian Smith
Date: Wed 28 Oct 2020
Comments: Aston Martin have just announced another share issue,

£125 million representing 13.7% of the current share issue at 50p, roughly 33% have been allocated to the current major shareholders the remaining to institutions, in other words no chance for any remaining private investors.

Expanded and enhanced technology agreement signed with Mercedes-Benz AG, access to advanced technologies to be provided in exchange for new shares, Mercedes-Benz AG's equity stake to be increased in several stages up to a maximum of no more than 20.0%

So another 33% increase in issued shares, for anyone who has been holding on to an investment made before the start of the year this means little as 1/3 of almost nothing is still almost nothing, but to more recent purchasers this is a negative bit of news in the short term.

Although this is theoretically subject to a shareholder vote, I am assuming that this is just a formality.

However this news means that I have shifted my view to that Aston Martin is share with risks that may be worth purchasing, provided that you understand the core risk; As I see it the company has close to £1bn of debt and if the DBX doesn’t sell in quantity then it’s all over, there is no point in raising more capital because there are no radically different new models in the pipeline.

Once Mercedes gets to a 20% holding not only might their involvement make casual issuing of new shares difficult, it provides access to an electric drive train something Aston doesn’t have and can’t afford to develop.

Targeting c.10k vehicles, c.£2bn revenue and c.£500m Adjusted EBITDA by FY 2024/25

If the above actually occurs were to be the case, and what the expletive does Adjusted EBITDA actually mean, then you could easily make the case for market cap being 4-6 times £500m or £2bn-6bn. Given the current market cap of £1bn at 55p and adding in the new 33% share issues this would be 84p-250p

Given the debt level it seems pretty likely to me that no dividends will be paid for the next few years however they are a FTSE 250 company so some institutional support will remain. Tracker fund has no choice and discretionary funds may still find the risk acceptable.

For me the big downsides are that it is possible to almost see the company as a private company, Mercs share holding plus Yew Tree and its associated have a controlling interest.

There is also no reason to be sure about the sales level, the DBX is the company’s saviour and there doesn’t seem to be much information available publically about sales.
Read Count/ID: 779/14191

Buy/No Buy In A Nutshell
NegativesToo much debt and they have already done a share issue to fix that, very heavily reliant on sales of the DBX the new SUV, a worrying number of statements about how sponsoring the Stroll owned F1 team is great news.
PositivesNew management getting much more aggressive with people complaining that they asked for and were given loans but they can't afford them.
Initial Review Price51p
Last Review Price55.73p
Last Review Date02-Sep-2020
Navigation & Details
Pages


Share Commentaries, their purpose.