Europcar - Post Sauvegarde
All,
Please find our unchanged analysis here.
Following Europcar's restructuring becoming effective on Thursday, Friday’s share price rocketed as the stock is becoming available to a wider investor audience. Nevertheless, the European season is losing some months and the stock should have an overhang of structural sellers. So we remain positive on the company’s prospects over the coming years, even by our calculations, but are concerned about the stock’s shorter-term prospects (except that we are all rotating into recovery stocks now).
Paradoxically, the tourism centric car rental company is seeing opportunities in B-to-B rental models, but it's the tourism that will likely come back more strongly. We have been constructive on Europcar throughout the last year but were neither keen on betting against the RCF’s superior position, nor on backstopping RCF and TL paper we did not want to own.
Our valuation of the company was based on pre-Corona valuations of car rental companies. Post-Corona, equity valuations have risen strongly and that should reflect in Europcar shares too.
We remain long the EC Finance bonds for a small position but are still potentially looking to finally exchange that exposure into post-Sauvegarde shares when the price drops again and volume is available. Should that not materialise, we will likely be shelving our coverage of the name as liquidity is strong and the fleet flexible enough to adapt to the new situation within the year.
Wolfgang
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E: wfelix@sarria.co.uk
T: +44 203 744 7003