$MBG (+1,16%) currently appears to be under pressure. I would like to share my rough thoughts on the current valuation of the company:
Mercedes' operating business basically consists of "Cars + Vans". The free cash flow from this business will be around €5 billion in 2025, down from around €9 billion previously.
The company has net cash of around €32 billion.
The banking division could roughly be valued at 5x -7x multiple with around € 6-9 billion.
In addition, there is a 30% shareholding in Daimler Truck, which corresponds to around €10 billion at the current valuation.
All of these are non-operating businesses with a total value of around €48-51 billion. With a current market valuation of €53 billion, the market is therefore pricing in the core operating business at €2-5 billion. Admittedly, there is little confidence in the business. At the same time, this business delivers €5 billion fcf in a relatively poor year! There are certainly working capital effects here that push the whole thing up (+1.5 bn € cf. 2024) and a downside to 0 is certainly not unrealistic for a cyclical company. If you try to normalize the fcf conservatively, e.g. WC -1.5 bn € compared to 2024, there would still be 2 bn € left from a business that the market is pricing at close to 0.
For a business operating in a difficult environment, I still find the valuation with such figures rather overpessimistic. What do you think?
