The Intelligent Investing Podcast #106: Jeremy Raper; Endor AG
Jun 22, 2020
36:23
For the full video interview on YouTube, click here.
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OverviewEndor AG is a Munich-listed holding company whose sole asset is Fanatec, the premium provider of racing wheels and other accessories for sim racing games played on consoles and PCs
Despite being a German-listed small-cap, the company has ~80% market share in the premium wheel/accessories segment and has essentially locked up exclusive branding rights for all the major OEMs and racing organizations (F1/Nascar/WRC) to produce branded replica racing wheels. Growth Endor AG grew 70-80% last year and has compounded revenues at 40% over the last 10yrs, as iRacing/simulated racing has grown organically in popularity at very high rates COVID-19 Impact Current growth is exploding due to COVID-19 and the mainstream recognition sim racing has garnered with normal sports closed for the last three months. The current business is growing 100-200% per annum, so much so that the company can barely keep up with demand. The company has already leaked they are targeting 150-200mm in revenues at 25-30% EBIT margins in the next couple of years (versus 40mm revenues last year and 80mm this year). Going Forward The stock currently trades at ~11x 2021 earnings, and ~2x 2021E sales, despite a multi-year runway where the business could grow 30% for a very long time. Fair value on a 'normal' exchange with English disclosures/investor relations would probably be 4-5x the current price. Jeremy believes that even on the minor German exchange, it's hard to see how the stock doesn't double or triple again. Staying In Touch With Jeremy RaperStaying In Touch With Eric Schleien