Aston Martin - comment

Aston Martin's results were a bit of a curate’s egg. However, our expectation that Aston Martin has sufficient liquidity is supported by these results and 2023 guidance. The bonds are trading around par and at >10%, are looking more attractive. Management guidance for H123 is sufficiently detailed that there should be few surprises over weaker deliveries over the next two quarters.  Our argument for Aston Martin hasn’t changed but we will provide a detailed update to our analysis and our model in the coming days.

Q422 was better than we expected. Due to the inventory bubble of DBX’s needing semiconductors to be finished passing through the system, working capital and sales performance exceeded our expectations. The gross margin was lower than we expected due to the weight of deliveries into China (the DBXs), but this will reverse in 2023 as geographic patterns for deliveries return to normal. The first of the next generation of sports/GT cars are now in production and will begin customer deliveries in Q3. As a result, H123 will be weaker than we modelled, albeit with a better second half. The phasing of introductions of new vehicles from Q3 will dampen H1 sales, and guidance is for 7,000 deliveries for 2023, whereas we anticipated 8,500. There will be a boost for deliveries in 2024 as the remainder of the new models are rolled out to customers.