Exor: We Reiterate our Positive View
As Exor's investor day is approaching fast, our holding company analyst Saïma HUSSAIN has reiterated her positive view on the stock. This positive view is all the more valid as Exor's main asset, Ferrari (39% of Exor's AV estimated GAV), delivered excellent Q3-23 results with a stratospheric margin of 38%.
Whilst the last time we teased on the stock, Exor was being pegged as a holding company with little interest from investors, today's story is quite different. Exor has since been able to prove its attractiveness to the market, as evidenced by its share price performance. It would seem that the market has finally acknowledged Exor's ability to create value, having driven the creation of the car manufacturing giant - Stellantis - in 2021, completed the sale of PartnerRe in 2022 representing a €2.4bn capital gain, and acquired a stake in the undervalued MedTech giant Philips in 2023.
Exor share price momentum
From its July 2022 low, Exor is up by nearly 40%, touching its November 2021 highs. Just as the HoldCo had been overwhelmed by the challenging macroeconomic environment, after the remarkable recovery in recent months, it would be fair to say that the Agnelli holding company is off the hook. Clearly, fears about its latest investment, Philips, the Juventus scandals, and the automotive sector's woes have not fazed investors.
An unbeatable track record
Taking a closer look at Exor's history, the Agnelli family's holding company has pulled off a number of masterstrokes, chief among them the creation of Stellantis in 2021. The emergence of Stellantis stands out as a brilliant feat for Exor, which was able to transform an unlikely asset, Fiat, into a series of high-value transactions. While we were already praising the merits of such an asset in a difficult automotive environment, due to its geographic diversification into European and North American markets, and its positioning for electrification, Stellantis has kept proving us right ever since. At a time when most European EV carmakers are stalling, with the end of Covid-induced scarcity and the advent of Chinese EV imports straining their pricing power, Stellantis is holding its own. Quite rightly, the volume-driven car manufacturer has rationalized its costs, boasts a last-minute capacity and is gradually renewing its portfolio of vehicles. Even more, Stellantis has demonstrated that it is still possible for European players to conquer the EV world by being the first automaker to design an EV for under the €25,000 price mark. Accordingly, with its 14.4% stake. Stellantis (worth €8bn), Exor has got its hands on one of the most resilient players. Speaking of which, notwithstanding its 60% exposure to the automotive sector, Exor has little to worry about when it comes to Ferrari either. Ferrari's luxury cachet, placing it in the Hermès category of the automotive world, makes it immune to auto sector headwinds.
Diversifying for the better
Exor's capital allocation skills are not limited to the automotive and reinsurance industries. As a family-owned company, Exor adopts a long-term view and is committed to minimizing its risks, resulting in a diversification effort. Beyond its 22.9% stake in Ferrari, Exor also has a 77.3% stake in the Chinese luxury brand Shang Xia and a 24% stake in the number 1 in luxury heels, Christian Louboutin. Apart from luxury goods, Exor is particularly interested in the technology and healthcare sectors. This interest resulted in the acquisition of a 10% stake in Institut Merieux for €833m, another family-driven holding company owning the renowned in vitro diagnostics company BioMérieux, as well as a 45% stake in Lifenet Healthcare for €67m, an Italian company specialized in the management of hospitals and outpatient clinics.
Exor's latest addition to its portfolio is none other than the MedTech giant, Philips, 15% of which was acquired for about €2.6bn in August. This move came as a bit of a surprise given the product-recall issues facing Philips, but we do understand the appeal of the stock for Exor. Having lost almost 60% of its value since April 2021, Philips appears undervalued, making it cheap exposure to MedTech.
The hefty discount calls for buying
We are Exor's fans as a family-holding with a long-term vision and a transparent portfolio of over 80% listed assets, value creation credentials, a successful capital allocation track record, and a diversification strategy that we expect to bear fruit. Certainly, Exor's share price has enjoyed a fine rally since July 2022, which has gradually decreased the discount to NAV. Yet, this does not detract from the appeal of Exor, which continues to trade at a hefty 38% discount to AV's estimated NAV. Once again, Exor has nothing left to prove, ranging from the spin-off of Ferrari, and the merger of Fiat and Peugeot, to its disposals: Exor clearly knows how to allocate its resources efficiently.
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