Deutsche Bank stays at 'hold' on Aston Martin debt after St.Athan opening

By Alexander Bueso

Date: Monday 09 Dec 2019

Deutsche Bank stays at 'hold' on Aston Martin debt after St.Athan opening

(Sharecast News) - Deutsche Bank's Richard Phelan reiterated his 'hold' on Aston Martin's medium-term notes following the carmaker's official launch of its new manufacturing site at St.Athan.

The new site, Phelan explained, would be absolutely key for the firm and the place where it would produce its new SUV, the DBX.

"The development of this one model will be critical for the success of entire business, in some ways even more critical than the DB11 has been in last several years, and represents a transformational shift for the company in terms of product range as well as hoped-for scale of the business," the analyst said.

Together with Aston's existing site at Gayden, St.Athan would yield an optimised capacity of roughly 14,000 vehicles, versus a total wholesale volume of 6,441 in 2018 and a projected 6,170 in 2019.

A third test production run of about 60 cars was scheduled in the new year, with full production then set to start in March of the second quarter of 2020.

If Aston managed to secure 1,400 orders for the DBX before the end of the first half of 2020, that would unlock $100.0 of funding in the form of so-called 'delayed draw notes', the analyst explained.

That would be on top of the £109.9m of cash on hand as of 30 September and the $150.0m of 12.0% senior secured notes sold via a private placement on 8 October.

The critical assumption underlying his analysis was that Aston would "largely execute to plan", selling 2,500 DBX in 2020, followed by 4,250 in 2021 and another 4,000 in 2022.

Lastly, Phelan noted the share price rise of 6 December on the back of reports that Lawrence Stroll, the owner of Formula One team Racing Point, was getting ready to table a bid for a stake in Aston Martin.

Aston's management present at the launch event, he said, made no comment on those reports.

Phelan stayed at a 'hold' on Aston's £285.0m-worth of 5.75% coupon Senior Secured Notes due 2022.


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