EQUITY RESEARCH: GROUPE RENAULT

Groupe Renault (RNO) is a multinational automotive manufacturer, who mainly offers product (including mid and upper range vehicles, light commercial vehicles, electric vehicles and motors) and related services (such as financing and insurance services, maintenance and repair services), with operation around the world across 38 countries. Groupe Renault is one of the leading European automakers, with a FY2021 total turnover of EUR 46bn (+6.3% YoY) and a market capitalization of EUR 8.9bn (as of October 8th, 2022). The purpose of this equity research is to evaluate the intrinsic enterprise value and share price of Group Renault, using various valuation approaches and considering industrial factors. The motivation of choosing Renault is based on my personal interest in the automotive industry and the European economic context. The project is presented in line with the research report format recommended by the CFA Institute. This equity research was finished on October 8th, 2022, referring public information and data available by the date, thus any events or information after October 8th will not be taken into consideration on the valuation results. In this equity research on Renault, a BUY recommendation is initiated, with a 2023YE price target of EUR 41.59/share, representing an upside potential of 36% (annualized upside potential of 29%), against the closing price of EUR 30.68 on October 8th, 2022, but with high risk, considering the current cost inflation and supply chain disruption driven by the Russia-Ukraine war. Current undervaluation is mainly due to the fact that a) Electrification is a revolutionary process and the EV market is still not mature enough to gain investor’s confidence; None of the leading players are stabilized, they are either emerging new entrants or traditional players in transition phase b) The Renault-Nissan-Mitsubishi alliance has not fully achieved its synergy and potential yet.