This topics discusses position changes of Sixt.
I today increased my position of Sixt by 50% at a price of €61.00. The position was a bit small and is now on par with other positions like United Internet or Match Group.
My main reasons have been
- Sixt is according to our research and insights the leading car rental company in terms of operations, marketing, technology. Competitors like Hertz, Avis, Enterprise or EuropCar are not on par.
- Sixt has room to grow in particularly in the United States where their market share is tiny and competitors are not well run overall. (Enterprise looks to be the strongest competitor)
- I gained more confidence in the performance of Sixt new CEOs, the Sixt brothers as they demonstrated a couple of years of solid performance by now since taking over.
- Sixt is relatively cheaply valued at a P/E of approx. 10.
- It’s debt is easily covered by their rental vehicle fleet. The vast majority (around 80%) of those vehicles have repurchase agreements and do not pose any residual value risk to Sixt. A turnover time below one year give Sixt the flexibility to steer its fleet size according to demand and de-risk further if needed.
- The global car rental market is projected to grow slowly but surely. (At a bit less than 3% in Europe until 2029 and a bit more than 3% globally). I expect Sixt to take market share and grow faster.
Overall i would say the Sixt investment is a relatively conservative “value” investment and i do expect an aggregate 50% return in the next 3-5 years but not a 2-3X.
I see them as well positioned and well run company that should be able to keep growing at a moderate pace in the next couple of years. (Topline 5-10% yearly, button line more volatile due to various cost factors and cost savings potential but I think 10+% EBT is achievable)
Downsides appear to be limited due to Sixt flexibility to adjust fleet sizes. (Demonstrated e.g. during Corona)
Once i have more time i might give further reasons into my reasoning.
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