Ald, the strongest rise in the SBF 120 mid-session on Tuesday 8 November 2022 – 08/11/2022 at 12:12

(AOF) –

Ald

(+ 4.04% to € 11.32)

The long-term rental and fleet management specialist, a subsidiary of Société Générale, benefited from mid-session investor interest. UK competition authority, the Competition & Markets Authority (CMA), announced Tuesday that it has cleared Ald’s acquisition of Dutch long-term vehicle financing group LeasePlan.

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Key points

– European leader and 2nd in the world in car rental, with a fleet of 1.45 million vehicles;

– 1.3 billion euros in revenues generated by lease payments (48%), from rental services (46%) and from the resale of vehicles at the end of the contract;

– European presence (80.3% of the fleet in Western Europe, 8.8% in Central Europe and 5.3% in Northern Europe) with diversification in South America, Asia and Africa for 5.6%;

– Business model: contracts lasting more than 3 years for the offer to large companies, partnerships with car manufacturers and banks (34% of the revenues from the offer to companies and 66% to individuals) and diversification of the offer to individuals;

– Capital controlled at 79.82% by Société Générale, Tim Albertsen as managing director and Diany Lebot as chairman of the 10-member Board of Directors;

– Sound financial position with a debt ratio of 16.7%.

Challenges

– “World 2025” strategy which will have to be revised after the acquisition, with effect from December 2022, of the Lease Plan, for an amount of 4.9 billion euros paid in shares and cash, which would make the group, called NewALD, the world leader in mobility with a fleet of 4.5 million vehicles and would reduce the share held by Société Générale to 53%;

– Innovation strategy: anticipation of the use of connected and intelligent vehicles / global service from the single MyAld platform combined with 2 sales platforms / extension of the offers of the digital solution – Pop Go, ALD Sharing, ALD Move, etc .;

– Environmental strategy aimed at reducing carbon emissions by 30% in 2025 vs 2019, towards customers: from a single label: ALD bluefleet, which indicates more responsible services, ALD switch (electric or internal combustion / hybrid vehicles), ALD electric (integration of vehicles into fleets), ramp-up of non-diesel vehicles and shared use (partnership with Blablacar, Klaxit, Drivy, etc.) / “green” loans for the acquisition of low-carbon vehicles;

– Partnership spin-off (Amazon in Spain, Tesla in 14 countries, Polestar in 3 and Mitsubishi in Malaysia) and diversification into flexible short-term rental and car sharing;

– Increase in the sale prices of used vehicles, to 3,212 euros per unit;

– Activity protected by the multi-year duration of lease contracts.

Challenges

– Resistance to 5 challenges: supply interruptions: anticipation of orders, support for partnerships with producers / rise in rates and exchange rates: systematic hedging / inflation: adjustment of parameters to new contracts / recession: increase in offers of use and multi-cycle rentals / increase in energy: strengthening customer advice and innovative products;

– After a net profit up 72% on 1

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semester, 2022 target of an increase from 2 to 4% of the financed fleet, a unit resale price of + € 2,000 and a distribution rate of 50 to 60%.

The negative effects of rising interest rates

Rising interest rates usually cause bank income to increase through loans. In Europe, according to a survey conducted by S&P of 85 banking institutions, the sector expects an average increase of 18% in the interest margin. However, this new inflationary environment also has undesirable effects, notably an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s activities, from loans to asset management, whose income is correlated to market valuations. Reassuring element: euro area banks are strong enough to cope with a deteriorating environment.

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