Electrification And Digitalization Will Unlock Future Mobility

Key Takeaways

• Strong EV adoption and digitalization strategies position Ayvens to capitalize on global decarbonization, expanding recurring services and high-margin revenue streams.
  
• Ongoing integration of ALD-LeasePlan and focus on retail and SME segments are driving cost efficiencies, higher margins, and resilience for future market rebound.
  
• Rising EV fleet exposure, weak demand, integration challenges, and persistent market headwinds threaten profitability, revenue growth, and margin stability.

Catalysts

Provides service leasing and vehicle fleet management services in the France, Rest of Europe, Latin America, Asia, and internationally.

• The accelerated adoption of electric vehicles, evidenced by EV penetration reaching 43% (with full electric at 30%) of new deliveries, positions Ayvens to benefit from global decarbonization agendas and higher EV leasing demand-likely supporting long-term revenue growth as fleet electrification continues and recurring services expand.
  
• The shift toward Mobility-as-a-Service and flexible vehicle usage models is increasing the relevance of Ayvens' retail channels and digital offerings, highlighted by the company's focus on growing direct retail, partnerships, and digital platforms-catalyzing higher-margin opportunities, enhanced cross-sell/upsell, and improved customer retention that could boost net margins and earnings over time.
  
• Realization of synergies from the ALD-LeasePlan merger (€146 million in H1 and on track for €350 million in FY25) and continued integration progress (now at 70% coverage) are driving cost efficiencies, resulting in a declining cost/income ratio and supporting further margin expansion and profitability improvements.
  
• Investment in digitalization-via proprietary platforms and online offerings-enables advanced fleet management, telematics, and direct customer engagement, differentiating Ayvens in a market moving toward connected, data-driven mobility solutions, potentially reducing customer acquisition costs and expanding recurring revenue streams.
  
• Despite the recent subdued European mobility market (fleet and asset declines), Ayvens' product diversification and strategic actions to target retail and SME segments position the company to capture future demand rebound, supporting normalized fleet growth and protecting long-term earnings potential once market conditions recover.

Ayvens Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Ayvens's revenue will grow by 3.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.9% today to 4.9% in 3 years time.
• Analysts expect earnings to reach €1.4 billion (and earnings per share of €1.52) by about August 2028, up from €724.3 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 8.1x on those 2028 earnings, down from 10.8x today. This future PE is lower than the current PE for the GB Transportation industry at 60.7x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.03%, as per the Simply Wall St company report.

Ayvens Future Earnings Per Share Growth

Risks

• Increasing share of battery electric vehicles (BEVs) in the fleet is leading to persistent losses on used BEV sales, particularly in key markets like the UK, where secondary market maturity is lagging and price performance is weak-this trend is expected to continue and could negatively affect net margins and bottom-line profitability as EV penetration rises.
  
• Demand for new operating lease products remains subdued among corporates due to both a weaker economic environment and adverse changes in taxation regimes across Europe, resulting in a declining total fleet size (down 4.5% year-on-year) and decreased earning assets, putting ongoing pressure on revenue growth.
  
• Full normalization of used car sales results is anticipated, with current profitability benefiting from exceptionally strong results on internal combustion engine (ICE) vehicle disposals; as EVs comprise a greater share of disposals and ICE tailwinds fade, the risk of declining average unit profits could materially reduce earnings.
  
• The ongoing integration of ALD and LeasePlan is not yet complete (with approximately 30% of the group still to be technically or legally merged), and although synergy realization is progressing, the risk remains of higher-than-expected restructuring costs or unrealized synergies, which would elevate operating expenses and compress margins.
  
• Market headwinds, such as lower new car deliveries (still well below pre-COVID levels) and continuing restructuring in key geographies (UK, Turkey, Germany), point to potential further declines in earning assets and volume growth, which, if not offset by commercial actions, could lead to stagnating or reduced revenues over the long term.

Valuation

• The analysts have a consensus price target of €10.886 for Ayvens based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €12.2, and the most bearish reporting a price target of just €9.3.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €28.3 billion, earnings will come to €1.4 billion, and it would be trading on a PE ratio of 8.1x, assuming you use a discount rate of 8.0%.
  
• Given the current share price of €9.58, the analyst price target of €10.89 is 11.9% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.