Porsche “accumulate”

09/12/07 - AC Research

LONDON, September 12 (newratings.com) - Analyst Henning Wagener of AC Research reiterates his "accumulate" rating on Porsche (POR3).

According to AC Research’s research note dated September 11 and published this morning, the company has announced its preliminary 2006/2007 earnings results. In that period, Porsche was able to grow sales by 3.4% y/y to €7.4 billion. Vehicle sales at the same time were up 0.7%, at 97,515 units.

Sales of the 911 model rose by 8.8% to 37,415 units. Here, the company also benefited from the new 911 Turbo model. With sales of 33,943 units, the Cayenne almost reached last year’s level of 34,134 vehicles. One should always bear in mind that production of the first generation of this car already ended in November of 2006, while the new Cayenne was not introduced before the end of February. Considering that the Cayenne was thus not available for a period of three months, sales were rather healthy, the analyst says. Finally, sales of the Boxster model declined by 1,760 units to 26,146 vehicles.

The analyst considers the published results as rather positive. Here, Porsche benefited on the sales side from an improved product mix. A possible economic downturn in the US is considered a risk factor for the company’s future economic development. Already in the last fiscal year of 2006/2007, sales in the North American region dropped 10.3% to 33,576 units. The analyst adds, however, there should still be some high growth potential in emerging markets, such as China and Russia.

At Monday’s closing price of €1,235.53 and a 2007/2008 P/E ratio of roughly 14, the company’s stock still seems to enjoy a rather moderate rating, considering its extraordinary profitability. At the same time, securities experts indicate that earnings in the completed fiscal year have been significantly higher than the year before, especially considering the favourable Volkswagen performance. With respect to operations, Porsche expects another significant boost to growth rates with the Panamera market launch scheduled for 2009.

AC Research reiterates its "accumulate" rating on Porsche.