Markus

$NOK senior executive Owczarek Konstanty (Chief Business Development Officer) bought a meaningful ~500 k$ stake. I didn’t expect insider buying at these valuation levels, but they likely have good visibility into the pipeline. Selling can indicate many things, but buying usually indicates just one. I hope I’m wrong, but for me $NOK current valuation is far from an attractive risk/reward, with EV/EBIT at ~30x and so far limited realized top-line growth, with analyst estimates implying only ~5% annual growth for the coming years.

Yes, the new Ferrari EV looks dumb. We all know it does. But we’re not the target market. China is. And it’s going to fly off dealer lots over there. Worldwide, China is now by far the largest market for luxury goods (Swiss watches, jewelry, high-end fashion, etc.), representing at least 30% of global sales. And it’s an especially critical market for ultra-luxury vehicle brands like Rolls Royce, Bentley, Mercedes’ Maybach line, Porsche’s higher-end models, and Ferrari. There are two major reasons for this: One is that China is simply a massive country, and, as its economy has boomed over the last five decades, it has produced the largest number of wealthy people anywhere in the world outside the US. There are now an estimated 50,000 ultra high net worth individuals ($30M+ net worth) in China, and the number is growing faster than anywhere else on the planet. The second is that China’s wealthy people—far more than those of America and Europe—are willing to spend their money on luxury consumption. The reasons for this are complex—part of it is probably that most Chinese wealth has been generated since only 1990, meaning that most UHNW Chinese families are first- or second-generation nouveau riche; part of it flows from the Chinese “mianzi” concept of social currency, under which signaling personal status via luxury brands is socially incentivized—but the effect is that rich people seek out the most prestigious and expensive brands, and they’re willing to pay to do so. Especially when it comes to ultra-luxury vehicles, which are frequently given as gifts for weddings, the sealing of business relationships, and life milestones. The net effect of this is that the ideal customer profile for Ferrari is no longer a fourth-generation Italian textile heir or an exited San Francisco tech founder; it’s a 32-year-old Chinese guy stepping into a C-suite role at his dad’s copper foundry after getting his MBA from Wharton or INSEAD. These guys want the Ferrari logo, but they want it on something electric (EV’s are highly encouraged by the Chinese government, especially in the large cities in which UHNW people congregate), and they want it on an ultramodern vehicle that looks and feels more like something that came out of a BYD or NIO showroom. So that’s why this new Ferrari EV looks the way it does, rather than like an electrified version of an F40 or a 360 Modena. It might look dumb to us, but it’s not going to look dumb for Ferrari’s shareholders.

$AUROORA 🇫🇮 Finnish serial acquirers first earnings are out and looking pretty strong all around. 12% organic growth, which is solid in the sluggish Finnish economy (+41% total growth). Margins improved, ROCE stable. Still fairly cheap vs peers (12-ish x LTM EV/EBITA)

$Relais Q1: Good organic growth driven by the cold environment Sales: +44% (organic +7%) EBITA margin: 10.8% (11.1% YoY) Net debt / EBITA: 3.5x (2.9x) While the M&A machine continues to contribute to growth, I’m very pleased to see organic growth returning to the growth trend. The drivers behind this were partly the cold weather in Q1, so it will be interesting to see whether this was a one-off effect or a more structural trend. The CMD will be in one week, and I’m very excited to see management’s strategic focus. As mentioned before, I hope to see more focus around return-on-capital metrics. I would also like to see a greater emphasis on capital allocation to create shareholder value i.e. no dividends and preferably share buybacks at the current (in my opinion attractive) valuation levels of ~10x EV/EBITA (NTM). Unfortunately, given the board’s priorities, I think that may be too much to ask for. Keeping the balance sheet under control will also be critical since, in my opinion, it is somewhat stretched at the moment, and I would prefer to see leverage closer to 3x. If the investor story were expanded more outside Finland where the serial acquirer business model is less well known there could also be room for valuation multiple expansion toward Swedish peers.