CCTV Script 21/10/15

– This is the script of CNBC's news report for China's CCTV on October 21, Wednesday.

Welcome to CNBC Business Daily, I'm Qian Chen.

Ferrari is now listing on the NYSE under the ticker code RACE.

The carmaker's on track to raise just under 10 billion dollars after pricing its IPO at 52 dollars a piece.

At that price, Ferrari is valued at nearly 35 times earnings - that's way higher than multiples for other car companies like GM which is valued at 6.6, and Ford at 8.1.

So what's the difference?

The prancing horse doesn't want to be seen as a carmaker, but a luxury company.

This guy, Fiat Chrysler's CEO, Sergio Marchionne, who's also Ferrari's chairman, has been going on for months that the brand should be valued as a luxury goods maker like Prada which is valued at 19.3x, and Hermes which is valued at 31.2.

And in it's s-1 filing, just in case anyone wasn't sure what Ferrari wanted to brand itself as, the word luxury appeared 151 times.


If you look at its balance sheet, most of Ferrari's assets are in its brand value - look at its goodwill and intangible assets -- (ON CAM) they exist only as concepts. Sales growth at Ferrari is nowhere near top speed.

And that's intentional. Ferrari sells around 7 thousand cars a year globally to keep its brand exclusive; it's planning to up that to 9000 by 20-19.

that's compared to Toyota which sold 10 million vehicles back in 2013.

The majority of buyers are in the US - which is Ferrari's biggest market.

The bulk of its revenues though come from EMEA. China and the Pacific make up a small portion of its sales - only 21%.

However, demand remains a little more uncertained, as Ferrari's revenues from mainland China went down by 26m euro in the first half of this year.

[JAMES CHAO IHS Automotive Consulting, Director, Asia Pacific] "121915 It's my sense that to go to seven to nine thousand is doable in terms of balancing exclusivity and volume but once you get beyond the 10,000 unit point that's where I would a little nervous in terms of what would loyal Ferraris owner think if they see themselves driving on the other side of the street with the same car"

Proceeds of the offering will be used to help fund FCA's 48 billion euro turnaround plan, centred around the revamp of its Alfa Romeo, Jeep and Maserati brands, as it seeks to boost global sales to 7 million cars by 2018.

[JAMES CHAO, IHS Automotive Consulting, Director, Asia Pacific] "Monetizing the asset Ferrari is an important part of Sergio Marchionne's overall plan at FCA, at Fiat Chrysler, the funds will be used for product development in the larger world of the Fiat Chrysler cars so this is very important for funding purposes as well"

The Ferrari family owns 10 percent; Fiat Chrysler owns the remaining 90 percent, but Fiat Chrysler's stake will be reduced to 80 percent after the IPO.

Would it be the SAME Ferrari who liked to say, "Ferrari always builds one less car than the market demands"?

We'll wait and see.

CNBC's Qian Chen, reporting from Singapore.

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