Aston Martin Lagonda (lon:aml)
Aston Martin – I Keep Wanting To Buy

Aston Martin Lagonda Financials

ItemCurrent PeriodPrevious Period
Period6 Months6 Months
Adjusted Earnings
Adjusted EBITDA£22m£106m
Statutory Profit(£63m)£12m
Adjusted Profit(£70m)£21m
Total Debt£859m£704m
Net Debt£732m£560m

Commentary History
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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 – I Keep Wanting To Buy
Company: AML - Aston Martin Lagonda
Share Price Then: 462p
Author: Ian Smith
Date: Mon 13 Jan 2020
Comments: There is something about the Aston Martin share price that keeps drawing my attention, the price is down to 400p ish so surely it is time to buy?

After all there have been two 15% spikes when there was news that someone was about to invest heavily, a consortium involving Lawrence Stroll and then CATL the Chinese batter maker.

Then I hear that the marketing chief has gone and that Aston the latest trading update says

Year-end cash balance was £107m, giving expected net debt range of £875m-£885m and DBX order book has built rapidly to c.1,800 since it opened on 20 November 2019, ….. As a result, we have now exceeded the various conditions to be able to draw the additional $100m of April 2022 notes and currently anticipate drawing these down within the next four weeks

Put another way, “hurray we are incurring another $100m in debt”.

At the current price of 472p the market cap is just over £1billion or the amount of debt give or take a bit.

The DBX sales numbers do look promising at around 1,800 but it is not clear if these are confirmed sales or possibly and " is a small deposit."

In 2018 and 2017 Aston were reporting an operating margin of 13.4% & 14.2% but they seem to be saying that 2019 will see something like 13%.

The DBX has a starting price of around £160k and in the past Aston have been reporting 40% gross margins.

So the DBX Sales could mean an extra £115m in gross profit in 2020 which is roughly an extra 30% on my expected figure of £400m for 2019.

But it also seems to me that debt in 2020 will incur something like £80m-£100m in interest payments.

The net debt from 2105 to 2018 was £483m, £600m, £673m and £560m, with 2019 net debt expected to be £875 the increase in revenue from the DBX is merely helpful.

Surely anyone looking to invest is going to want to see debt down to £100m-£200m, meaning they need to inject about £600m-£700m.

This would seem to me to be something like a 4:1 share issue.
Read Count: 205/10107

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
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