Ferrari NV - H01-2017 EQUITY-AMC-ENGEL

EQUITY RESEARCH – Luxury Basket
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AMC - Consultancy
Equity and Market Research
www.amc-engel.com
Ferrari NV
EQUITY RESEARCH REPORT
Half year result 2017 and
outlook year end 2017

EQUITY RESEARCH – FERRARI NV
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Ferrari NV
Via Abetone Inferiore 4 Financials in: EUR (Million)
Maranello, 41053 Fiscal Year End: 31-Dec-2016
Italy Reporting Currency: Euro
Annual Sales: 3,105.1
New York Stock Exchange: RACE Net Income: 398.8
Frankfurt Stock Exchange: 2FE Total Assets: 3,849.6 2
Employees: 3,317 Market Value: 17,742.2
Ferrari NV
Ferrari is one of the world’s leading luxury brands, focusing on the design, engineering,
production and sale of the world’s most noticeable luxury performance sports cars. It symbolises
luxury, exclusivity, innovation, state-of-the-art sporting performance and Italian design.
Ferrari designs, engineers and produces its cars in Maranello and Modena and sells them in
over 60 markets worldwide through a network of ~200 authorised dealers and after sales
facilities. It currently sells 10 models, including 3 sports cars and 3 GT cars. It also produces
limited edition supercars such as LaFerrari Aperta and F12 TdF and very limited edition series
such as J50 and one-off cars.
The low volume production and long delivery waiting time is a conscious strategy intended to
preserve the company’s reputation and exclusivity.
Its Scuderia Ferrari is the most successful team in Formula 1 history, having won 224 Grand
Prix races, 16 Constructor World titles and 15 Drivers World titles. With approximately 380 mn
television viewers annually, Formula one activity contributes to strengthen the brand.
It also licenses the Ferrari brand to a selected number of producers of luxury and lifestyle goods
and sells Ferrari-branded products through 29 franchised and 16 directly operated Ferrari stores
active in 16 countries, as well as on its website.
Ferrari NV Revenue and Net Earning Overview in € Millions
Ferrari´s main revenue stream comes from sport car production, currently they have 10 models
on the market and they are sold in over 60 markets on global scale.

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Ferrari produces and sales currently 10 models with different variants on the market:
 Sport car 488 GTB
 Sportwagen 488 Spider
 Sport car F12 berlinetta
 GT Version California T
 GT Version GTC4 Lusso
 GT Version GTC4 Lusso Turbo
 Ferrari 812 Superfast
 Limited Edition Supercars F12 TdF
 Limited Edition Supercars J50
 Limited Edition Supercars La Ferrari Aperta
Ferrari management’s plans to increase the sports car shipments from 7,694 units in 2015 to
approximately 10,000 by 2019. There is plenty of evidence that demand currently far outstrips
supply, for example, customers sometimes need to wait a year or more to get their ordered cars
and in Q2 / 2017 results, Ferrari announced that the entire production of the new sports car 812
Superfast is sold out beyond 2018.Higher
profits from increased sports car sales form
one of the key pillars of increased earnings
in the next two years. From our perspective
there is no risk to the brand exclusivity to
expand the annual production above
10,000 units per annum. Ferrari is the
strongest brand in Formula 1 racing history,
and this performance contributes to the high
esteem in which the brand is regarded.
Therefore we see no risk , that an annual production figure over 10 000 car would dimish the
exclusivity of Ferrari or reduce the brand attraction to the customers.
But there is a challenge to solve if Ferrari push their production level above 10 000 units
As long as Ferrari does not surpass 10,000 units of global production, it is classified as a Small
Vehicle Manufacturer (SVM). Based on the SVM status Ferrari is in a position to negotiate its
fleet emissions directly with the EU so they are not be administrated by the 95g CO2/km cap for
other larger manufacturers. On the way to expand the fleet production, Ferrari agreed back in
2014 with the EU that it would deliver a 20% reduction in its average fleet emissions, which had
a mark in 2014 of 270g CO2/km and therefore it should be a mark of 216g CO2/km by 2021.
On the way to meet this target Ferrari has subsequently downsized and turbocharged all its V-8
engines and fitted its LaFerrari V-12 supercar with a hybrid electric powertrain that will be further
developed for use across the entire range from 2019. On the other side of the coin it is legitime
to say that Ferrari customers paying € 200 000 or more for a car, would not get nervous if they
have to pay few extra thousand euros in emissions fines and therefore , they have still the fun
the have a real engine under the hood. We see to some extend the emmision regulation as a
challenge to expand the production volume above 10 000 units, but we perceive it not as
limitation for Ferrari to do so.
From a strategic perspective it is more interesting , how does the future product pipe line look
like to move over the 10 000 units mark.
New launch 2017

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Is it a SUV that will be added to the product portfolio?
Based on recent media reports, the discussion that Ferrari might launch a SUV vehicle in 2021
turns more and more from rumours level to reality.
Mr Marchionne admitted that such a vehicle was being evaluated if it could match Ferrari’s
sporting DNA and brand ethos. We be told that Mr Marchionne will give more details to this
plans, at the capital markets day, when Ferrari presents the new five-year plan to 2022
scheduled approximeadetly H1 2018.
A Ferrari SUV, would outperform the chinese market. China, is a market which has no sports
car culture and if you have been driving a car on the street in China , that´s no wonder due to
traffic jam and truck frequency. The wealthy people in China prefer to have drivers and therefore
it is no surprise that they prefer more space on the back seat for theirself and their business
guests. This is one of the reasons Porsche is successful with the four-door Cayenne and Macan
SUVs in China.
We don´t limit the market success for a Ferrari SUV version to the Chinese market, it can be
successful in every market. The point is that the Ferrari SUV must create distinction in the
Super-SUV Segment. Ferrari knows that and Mr Marchionne confirmed during the 2Q17
earnings call that the SUV vehicle, “Will probably happen but it will happen in Ferrari’s style”.
What creates the distinction of a SUV in Ferrari’s style?
From a sportive character we see Lamborghini´s forthcoming Urus as the closest competitor
and Lamborghini has now confirmed the release date for the Urus the manufacturer's brand-
new SUV, for December 4th
2017.
The Lamborghini Urus will cost around $200,000 when it
goes on sale. The marque expects to build 1,000 units of
the Urus in 2018 before boosting volume to 3,500 units in
2019 at full production. Lamborghini estimates that the
Urus will account for half of the Italian supercar maker’s
annual output. The Lamborghini Urus will come with a
standard 4.0-liter biturbo V8 engine having 650
horsepower or respectively 484 kilowatts, which could make it the quickest SUV on the market.
This position is currently owned by the Bentley Bentayga.
We don´t see the Ferrari SUV distinction in the horse power, it will be light weight and driving
performance. The current Super – SUV have all massive horse power but still they are monster
in weight.The Bentley Bentayga has a kerb weight of 2440 kg , the Porsche Cayenne S still
weights 2175 kg, in general Super – SUV´s are well above a kerb weight mark of 2000kg.
So far as we know, Projectcode of the Ferrari SUV Project is F16X and the vehicle should be
build on the basis technology of the GTC4 - Lusso- successor named F166.
We think Ferrari would be able make a Super – SUV vehicle, which will be below 2000 kg, this
would create a benchmark in this field, we call it also distinction. A lot of horsepower in
combination with light weight technology, will also satisfy the enthusiasm sport car buyers of
Ferrari.
The main aim for Ferrari is to double profits by 2022, and the key to meet this targets are new
products. This could also include to produce more than 10,000 cars per year including a SUV
vehicle.
Lamborghini Urus

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The complete Study is available for Download on
our web page:
www.amc-engel.com
Disclaimer
The study is prepared by AMC - CONSULTANCY an independent research company.
The study is not intended as an offer to sell, or to solicit an offer to buy or form any basis of
investment decision for any class of securities of the company in any jurisdiction. All such
information should not be used or relied on without professional advice. The study is a brief
summary in nature and do not purport to be a complete description of the Company, its
business, its current or historical operating results or its future prospects.
This study contains forward-looking statements that involve risks and uncertainties. All
statements other than statements of historical facts are forward-looking statements. These
statements involve known and unknown risks, uncertainties and other factors that may cause
that actual results, performance or achievements to be materially different from those expressed
or implied by the forward-looking statements.
This study is provided without any warranty or representation of any kind, either expressed or
implied.

Ferrari NV - H01-2017 EQUITY-AMC-ENGEL

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Ferrari NV - H01-2017 EQUITY-AMC-ENGEL