Buy: Exor
Exor is the Agnelli family’s investment holding company, with core holdings in Ferrari, Stellantis, CNH Industrial and Koninklijke Philips. The stock trades at a steep 50%-plus discount to NAV, providing investors with an attractive entry point into a portfolio of high-quality industrial and luxury assets.
Management is actively addressing the discount through the sale of €3bn (or 7-million shares) in Ferrari and the announcement of a €1bn share buyback programme. A more appropriate discount to NAV would be 40% or lower, implying at least 20% upside from current levels. Additionally, Exor’s management has a strong track record of value creation, as demonstrated by its strategic acquisition of Koninklijke Philips.
With a disciplined capital allocation strategy, exposure to premium global brands and ongoing efforts to unlock shareholder value, Exor presents a compelling investment opportunity. The deep discount provides a margin of safety, while management’s proactive approach enhances long-term upside potential.
Sell: Curro Holdings
Curro faces structural challenges that continue to weigh on its investment case. While management expects a credible financial performance for 2024, earnings remain affected by impairments of between R340m and R380m, mainly due to lower-yielding school assets. Eight campuses have been further written down due to slower than expected learner growth, while two others are affected by the planned closure of steel manufacturing operations in their catchment areas. Enrolments remain stagnant at 72,109 learners, with consumer spending constraints limiting further growth. The company also does not have any exposure to the faster-growing tertiary education sector. Despite the company repurchasing and cancelling 10.7-million shares for R120m, Curro’s updated headline earnings increase of between 9.3% and 17.5% indicates that real underlying growth remains subdued.
Demand for Curro’s schools has not rebounded meaningfully, despite interest rate relief and moderating inflation. Persistent impairments, weak enrolment trends and economic headwinds suggest limited upside, making Curro an unattractive investment at current levels.
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