COB 300 Strat Simulation

Michael Del Grande

Faris Hreish
(NYSE: ECOMP)
Becca DuBois Automotive Sector │ Buy Pitch
Aidan Froehlich
Sabrina DeFilippo
7/20/22

1
I. Business Overview

7/20/22

2
 Management
CEO CFO COO CMO CAO

Aidan Froehlich Michael Del Grande Rebecca C. DuBois Faris Hreish Sabrina G. DeFilippo
 JMU Finance and CIS  JMU Finance Major  JMU Management  JMU Marketing Major  JMU Management
Major  CEO of Stratton Major  Worked in sales and Major
 Worked in Customer Distributions  Supply Chain research marketing at a Porsche  Customer service
Relations for TopGolf  CEO of B&M  Chief Tour dealership experience for over 4
for over 3 years Mulching Coordinator, SAC years

Business Comps Analysis Risk Catalyst Valuation 3

Business Overview
E-Company Revenue by Vehicle Unit Sales by Region

$18,117 21.06% 24.33%

Ecca 25 North
$39,674 South
Efizz
Egad $11,866 West
Exel007 East
27.93%
26.93%
$16,764

 Over 85M in revenue in our most recent year  Founded in 2013

 Ecca25 was the most produced vehicle, and it had the  Headquartered in Antwerp, Belgium
highest profit margins  Leader in new vehicle production and manufacturing focusing on
 Largest automotive company by Market Capitalization innovation, experience, and luxury
 108.874B, next highest was 88.539B

Business Comps Analysis Risk Catalyst Valuation 4

II. Competition

7/20/22

5
Competitors

Firm D Firm B Firm F

Val Market Share: 12.6% Val Market Share: 9.8% Val Market Share: 26.8%
Revenue: $33.552 B Revenue: $26.256 B Revenue: $71.656 B
Dealers: 570 Dealers: 520 Dealers: 747
Utilization Rate: 141% Utilization Rate: 103% Utilization Rate: 118%

3% 6% 9%
13%
Family Minivan
Economy 46% Family Family
Sports 37% Truck 51%
61% Truck
30% Truck Economy 36%
Sports

8%

Source: Bloomberg

Business Competitors Analysis Risk Catalyst Valuation 6

III. Company Analysis

7/20/22

7
Year 1 Decisions

Saw there were no utility

New Car cars, but they had the
capacity to be very
successful market

Wanted to focus on higher

Build a Vision income markets by further
identifying ourselves with
our brand

Constructed new
New Development development centers so we
Center could work on multiple
projects in later periods

• Began manufacturing of Ecca25 Wanted to have maintain

Reduce cost of Efizz MSRP to gain traction so we
• Construction of new development reduced costs to keep a
center higher profit margin

• Cost reduction of Efizz

Business Comps Analysis Risk Catalyst Valuation 8

Year 2 Data

• Learning curve for marketing and dealer

relationships

Business Comps Analysis Risk Catalyst Valuation 9

Year 2 Decisions
Overcapacity charges were a
financial burden that had to
Increased Capacity
be adjusted each year, so
Available
capacity available was
brought up to 83 this year.

The Egad is our truck, and

Major upgrade for to boost sales, we made
Egad began major upgrades which go
into effect after 1 year.

Constructed new
New Development development center to work
Center on new projects in later
periods and create upgrades.

• Major upgrade for Egad Minor upgrade The Efizz is a family

• Increased capacity for Efizz completed car where safety is of
and on the market upmost importance, so
• Construction of new development minor changes were made to
center go into effect immediately.

Business Comps Analysis Risk Catalyst Valuation 10

Year 3 Data

• Share Price increased 118% to $56.87 per

Share
• Shareholder return increased by 31.1% from
-13.5% to 17.7%

Business Comps Analysis Risk Catalyst Valuation 11

Year 3 Decisions

New Dealers set to open

New Dealers next fiscal year. North
(5), South (10, East (5).
West (5)

Production capacity
Increased Capacity +85 units available to lower
over capacity charges

New Development Started selling the Ecca25

• Released Ecca25 Increased Interior, Safety,

Upgrades Styling, and Quality on
• Targeted towards Enterprisers and Egad
High-Income markets
• First mover advantage
• Removed Echo off the market

Business Comps Analysis Risk Catalyst Valuation 12

Year 4 Data

• Sales Revenue increased 16% to $42,545 Million

• Share Price increased 25% to $71.75 per Share

Business Comps Analysis Risk Catalyst Valuation 13

Year 4 Decisions

New Deals (5) North, (10)

New Dealers South, (5) East, and (5)
West

Production capacity +130

Increased Capacity units available to lower
over capacity charges

Started production on the

New Development
Excel007

• Started production on new Luxury Vehicle Increased Interior, Safety,

Upgrades Styling, and Quality on
• Focused for high income individuals, Ecca25
enterprisers, and singles
• Created economic moat from competitors

Business Comps Analysis Risk Catalyst Valuation 14

Year 5 Data

• Net Income increased by 117% to $4.640 B

• Dealer Rating increased 66 to 78

Business Comps Analysis Risk Catalyst Valuation 15

Year 5 Decisions

We paid off $200 Million

of our total 2.6 billion
Paid off Debt
dollars of short-term debt.

To improve our overall

4 New Dealers operations, we added 1
dealership to each region.

Completed minor cost

Cost Reduction reduction for the Ecca25 to
decrease its cost by $326
per unit.

• We increased our capacity by 250 to further Research was completed on

Research Completed Interior, Styling, and Safety
the lowering of our over capacity charge to help improve our overall
• Put $30 million into Training and Support company.

to raise our dealer rating

Business Comps Analysis Risk Catalyst Valuation 16

Year 6 Data

• BCG Matrix: Ecca25 remains on the star/cash cow border

and the Excel007 is in an ideal spot after 1 year
• Cost reductions of Ecca25 continue to increase
contribution margin, while other vehicles remain stable

Business Comps Analysis Risk Catalyst Valuation 17

Year 6 Decisions

Sold 343,000 units of the

Excel007, bringing in
Excel007
$15.435 million in sales
revenue

1 dealer in the north and

6 New Dealers West, and 4 in the South
where the Egad performs
the best

Completed minor cost

Cost Reduction reduction for the Ecca25 to
decrease its cost by $332.

• Excel007 hit the market Increased safety and quality

Upgraded Egad of the Egad. Improvements
• Opened 6 new dealers coincide with new dealers in
• Cost reduction for Ecca25 the south
• Upgrade of Egad

Business Comps Analysis Risk Catalyst Valuation 18

Year 7 Data

• Sold 2,747,000 Units

• 461,000 more units than the closest
competing firm

Business Comps Analysis Risk Catalyst Valuation 19

Year 7 Decisions
Overcapacity charges were a
financial burden that had to
Increased Capacity be adjusted each year, so
Available capacity available was
increased to 300 this year.

Research was conducted to

Research completed evaluate the importance of
on interior and safety changes to the interior and
safety of our cars.

Cost reduction for A minor cost reduction was

Excel007 complete completed for the Excel007

• Increased capacity Cost reduction for A minor cost reduction was

• Conducted research Ecca25 complete completed for the Ecca25

• Completed cost reductions

Business Comps Analysis Risk Catalyst Valuation 20

Year 8 Data

• Ecca25 maintains its star status

• Excel007 cements itself as a cash cow
• Overcapacity charges dropped by 527
million

Business Comps Analysis Risk Catalyst Valuation 21

Year 8 Decisions

Increased advertising for

Marketing
Excel007 and Ecca25

Production capacity
Increased Capacity +300 units available to
lower over capacity
charges

Share buyback of $250

Financing million, increased
dividends to $0.6/share

• Upgrades for Egad, Ecca25, and Excel007 Increased Interior, Safety,

• Increased overall firm technology Upgrades Styling, and Quality on
Ecca25, Egad, and Excel
• Bought $7 billion in CD's at 4% 007

Business Comps Analysis Risk Catalyst Valuation 22

Year 9 Data

• Share Price increased 15% to $220 per share

• Market Value increased 15% to $110 Million

Business Comps Analysis Risk Catalyst Valuation 23

Year 9 Decisions

(13) North, (10) South,

Dealers
(5) East, and (5) West

Dividends to $900 Million,

Financing bought back $4,000, and
bought $7,000 million
CDs

Increased production
Capacity
+500

• CDs returned $315 Million on investment Cost reduction Ecca25,

• More Dealers allows for Market share Upgrades
major upgrade to Efizz
increase minor upgrade to
Excel007
• Upgrades to Vehicles to keep moving
ahead of Competition

Business Comps Analysis Risk Catalyst Valuation 24

Year 10 Data

• Cumulative Net Income increased

by 29% to $67.089 Billion
• Cash increased by roughly 50% to
$46.16 billion
• Ecca25 and the Excel007 have
moved further into the Cash Cow
sector

Business Comps Analysis Risk Catalyst Valuation 25

IV. Risks and Catalysts

7/20/22

26
Risks
Cyclical Market
 Constant R&D spending
 We are aware of the changing
economy and market and
have concept tests and focus
groups being conducted to
ensure an advantage in the
future of the automotive
industry over our
competition.
Business
Growth of EV Market
 The automotive industry is
changing with an increase in
electric vehicles.
 We have plans to create an
electric vehicle as well as
hybrid options for our
customers.
 We don't have a current
electric vehicle and are
looking into sustainability of
car batteries.
Comps Analysis
Supply Shortages
 Chip shortages as well
disruption to vehicle supply
and demand has heavily
influenced the performance
of dealerships.
 We avoid major disruptions to
our supply chain through lean
operations with our domestic
suppliers and manufacturing
sites.
Risk Catalyst Valuation 27
Catalysts

Continued growth in dealer Continuous Innovation Consistent Increase in

rating Dividend

 Invest heavily into training
dealers
 Experience is important when
buying our cars
 Increase in dealer ratings
means that we can retain
customers
 First on market with both
utility and luxury
 Increase in technology each
period
 Upcoming plans include
developing for AEV market
 Dividend growth has
increased every period
 Will continue to grow in
accordance with the
company’s growth
 Shareholder mindset

Business Comps Analysis Risk Catalyst Valuation 28

V. Valuation

7/20/22

29
Relative Valuation
Quick Ratio Earnings Per Share
9% 35
8% 30
7%
25
6%
5% 20

USD
4% 15
3% 10
2%
5
1%
0% 0
2019 2020 2021 2019 2020 2021
-5

Debt to Equity Dividend

20% 2

15% 1.5

USD
10% 1

5% 0.5

0% 0
2019 2020 2021 2019 2020 2021

Business Comps Analysis Risk Catalyst Valuation 30

VI. Conclusion

7/20/22

31
Conclusion
Summary Improvements
• Keep consumers happy • Increased car technology specs more
• Increased dealer training and dealer availability
across country • Averaged in the middle for most qualities
• Keep shareholders happy • Refine marketing strategy
• Increased dividend payouts each year • Buying back shares and increasing
• Focused early on who we wanted to be dividends early on
• Innovate early, concrete target markets and
vehicles with sleek design
• Ecca25 and Excel007 were directly
marketed and designed for enterprisers, higher
income families, and singles
• Wanted to be the best
• Ranked highest in share price, net income,
shareholder return

Business Comps Analysis Risk Catalyst Valuation 32

Challenges

Marketing Making a specific

marketing Strategies

Refinancing our debt and

Financing learning to start a share
buyback program

Production of the Ecca25,

cutting production of the
Vehicle selection
Echo, and production of
Excel007
• Learning what regions to market to
• Lower interests for our debt
Upgrades Determining what
• Market research and creating economic upgrades for each vehicle
moat from competitors
• Market research to see what the consumer
wants

Business Comps Analysis Risk Catalyst Valuation 33

Plans for the future
• Produce AEV vehicle
• Sustain yearly increase in dividends
• Implement technology upgrades for quality, style, safety

Business Comps Analysis Risk Catalyst Valuation 34

VII. Appendix

7/20/22

35