Renault hopes to escape from its 'negative core value' curse

investing.com:

By Gilles Guillaume

PARIS (Reuters) — Renault (EPA:RENA) hopes it can lift the curse of its negative value next year thanks to the creation of two specialised businesses, Ampere and Horse, and its revamped alliance with Nissan (OTC:NSANY) and Mitsubishi, several top executives said.

Although the French automaker sold more than two million vehicles last year and posted record profits for the first half of 2023, investors effectively are valuing the company's core business at less than zero.

The group's market capitalisation is currently around 10.6 billion euros ($11.43 billion), much lower than European rivals. Stellantis (NYSE:STLA) is worth about 64 billion euros and Volkswagen (ETR:VOWG_p) 57 billion euros, based on LSEG data.

Renault's 12-month forward price-earnings ratio — a key metric for valuing shares — is 2.8, the lowest among European carmakers.

Excluding the value of Nissan shares held by Renault (6.6 billion euros), the net cash position of its automotive business (2.2 billion as of June 30) and financial services of its Mobilize unit (6.1 billion euros on June 30), the remaining «core» value stands at minus 4.3 billion euros for Renault's automotive assets, based on Reuters' calculations and Renault data.

«It is not up to me decide what is the core value of the company,» CEO Luca de Meo said at press conference on Wednesday with Nissan and Mitsubishi on their new alliance.

«My job is to actually make sure we do the right things so that the investors and the market understand there is a lot of substance in Renault.»

De Meo hopes the listing of Ampere, a «pure player» in electric vehicles and software earmarked for an IPO next spring if market conditions permit, will help give that substance.

In September,