AutoWallis Unveils its Strategic Vision for Expansion up to 2028

The renewed strategic vision for AutoWallis Group comes after the company surpassed its 2025 financial goals last year. Since its public listing in 2019, the auto retailer has seen a significant upturn in performance: its revenue has quadrupled, and profits have increased tenfold.

“Over the past five years, the expansion of the group was primarily transactional, while our organic growth also exceeded industry trends,” stated Zsolt Müllner, chairman of AutoWallis, at the firm’s May 6 investor day. Since 2019, AutoWallis has drawn HUF 48 billion from the capital market, increased the number of brands it represents from nine to 24, completed 11 acquisitions, and expanded its operations to 16 countries.

“Due to the exceptional trend-like growth over the past years, AutoWallis has now become an international group with more than half of its revenue consistently coming from foreign markets,” Müllner highlighted.

He also noted that the company achieved growth amid economic challenges such as the COVID-19 pandemic, supply chain issues affecting automotive manufacturing, high inflation, and rising financing costs, proving the resilience of its diversified brand and country portfolio.

“Thanks to continuous development, the company, listed in the ‘Premium’ category of the Budapest Stock Exchange, is poised for heightened attention from international investors,” Müllner predicted.

According to the company forecasts, the number of autos sold is expected to rise from 44,909 in 2023 to 100,000 by 2028. The firm’s updated growth strategy estimates that its revenues could more than double by 2028, reaching up to HUF 750 bln, representing a 15% annual growth rate.

Doubling Digits

Similarly, the company’s EBITDA is projected to double, reaching close to HUF 40 bln by 2028. The pre-tax profit is also expected to grow at an annual rate of 16%, reaching HUF 25 bln by the target year, more than double the figure for 2023.

“Hungarian stocks generally trade at low valuation multiples, but AutoWallis is particularly interesting due to its significant growth story,” Gábor Bukta, head of analysis at leading financial services consultancy Concorde Securities Zrt., noted. “The substantial growth deserves higher valuation multiples. If the growth narrative and high margins persist, they could significantly boost the stock price.”

Bukta admitted that, at the time of speaking, the updated figures had not yet been incorporated into his firm’s model, which currently had a target price of HUF 218, while AutoWallis’ stock had closed at HUF 151.5 on May 3. Concorde’s forecast was based on revenue of HUF 534 bln, with an EBITDA expectation of HUF 27.7 bln.

Discussing the latest trends, AutoWallis CEO Gábor Ormosy suggested that EU regulations might be reaching a turning point regarding the forced electrification of the automotive industry. He said that significant regional adoption differences are apparent, and the spread of EVs is occurring slower than anticipated.

Ormosy also touched on the increasing presence of Chinese automakers, for whom the adoption of electric vehicles could represent a glass ceiling; moreover, their cost advantage over European rivals could diminish while competition intensifies with Tesla and traditional car manufacturers.

“There is expected to be considerable attrition and consolidation among Chinese brands, but the winners could secure long-term positions,” Ormosy noted. He discussed AutoWallis’ strategy to continue expanding in the Central and Eastern European region while broadening its represented brands, primarily focusing on emerging manufacturers.

“AutoWallis expects that the more intense phase of expansion could last until 2026, followed by a stable, normalizing growth phase,” he predicted.

Financial Roadmap

In the short term, AutoWallis has laid out a clear financial roadmap that eschews further capital increases. Instead, the corporation is set on bolstering its strategy through what it calls the prudent utilization of accrued profits, supplemented primarily by bond and banking resources.

This fiscal approach underpins the management’s intention to table a proposal for predictable, long-term dividend disbursements to its shareholders post-2026. Concurrently, the management is mindful of the ongoing consolidation, which is expected to reveal additional opportunities, thereby permitting the reinvestment of accrued profits to fuel continued growth, as has been the norm.

AutoWallis is far from navigating toward 2028 on autopilot but instead says it is committed to significantly enhancing its visibility and stature within the capital markets. Central to this ambition is acquiring an Environmental, Social, and Governance rating, which will anchor the company’s credentials in sustainable business practices.

Furthermore, the strategy includes accessing broader green financing options to underscore its commitment to environmental sustainability, expanding coverage by financial analysts to improve market visibility, purchasing its own shares to signal confidence to the market, and diversifying its shareholder base to include more international institutional investors.

Moreover, Ormosy speculated on pursuing a dual listing on another stock exchange. Such an ambitious move would be predicated on the company’s growth achieving a substantial scale in select countries such as the Czech Republic, Poland, and Romania. As highlighted during the investor day presentation, such an expansion could justify tapping into local financial resources for further growth.

This article was first published in the Budapest Business Journal print issue of May 17, 2024.