Wizz Air: Taking Market Share, Growing Cost Advantage and Earnings

Daniel Baldini of Oberon Asset Management presented his in-depth investment thesis on Wizz Air (UK: WIZZ) at Best Ideas 2019.

Thesis summary:

Wizz Air is the largest airline in Central and Eastern Europe. Similar to Ryanair, Wizz operates as an ultra-low-cost carrier, a model its management team has executed well in the past, creating substantial shareholder value across multiple companies. With significantly lower costs than all competitors except Ryanair, Wizz has taken share in a market which itself has grown quickly.

Wizz is likely to expand its cost advantage in the future thanks to an order book for attractively priced Airbus aircraft with improved unit costs and lower financing costs due to its recently awarded investment grade credit rating.

Wizz should grow earnings at ~20% CAGR over the next five years yet is valued at only 14x earnings, below its average historic multiple.

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About the instructor:

Daniel Baldini is the founder and Managing Partner of Oberon Asset Management LLC, a New York based registered investment advisor managing separate accounts for individuals, partnerships, trusts and pension plans. Prior to founding Oberon in 2001 Mr. Baldini worked for the International Finance Corporation, the private sector arm of the World Bank, as an Investment Officer in the Asia and Eastern Europe Departments. Following graduation from the Stanford University Graduate School of Business and prior to joining the IFC Mr. Baldini lived in London for three years and worked for Electra Investment Trust PLC, a UK investment firm specializing in small public company and private equity investments.