With the record Australian new vehicle sales for December (up 4.1%) and full year 2017, few stocks seem to be benefitting this year. Particularly, sales of commercial vehicles resulted from improved business spending while sports utilities are also staying steady. These trends demonstrate an uptick in consumer spending with 2017 sales figure indicating to be up 0.9% over 2016.
 

Stocks’ Details

CARSALES.COM LIMITED (ASX: CAR)

Late last year, Carsales.com signed a binding Memorandum of Understanding to purchase the remaining 50.1% stake of South Korea’s SK ENCARSALES.COM (Encar.com), which gave CAR a 100% control and ownership of the South Korea’s number one online auto classifieds business and the move is expected to have better footprint going forward. While group’s earnings per share for FY17 was almost flat, there was a slight growth in reported NPAT while revenue from ordinary activities were up. The stock is already at a higher level and moved up 1.6% on January 04, 2018, and looks “Expensive” at the current price of $14.85
 

AUTOMOTIVE HOLDINGS GROUP LIMITED (ASX: AHG)

Up by 1.1% on January 04, 2018, Automotive Holdings aims to have strategic investments in Automotive acquisitions and adjacent opportunities; and the group has been consistently maintaining its dividend policy of paying 65 to 75% of operating profit. The group is gearing up to benefit from the new vehicle market trend as AHG has already about 6.2% holding in the new vehicle market in Australia, and has room for further targeted acquisitions. The group earmarked the completion of sale of its refrigerated logistics business, comprising the operations of Rand, Harris, Scott’s and JAT (Refrigerated Logistics) to CC Logistics (Australia) in first half of 2018. Due to certain shortcomings, the group’s earnings per share dipped in FY17 against FY16 and it demonstrated a slower start to FY18. However, the overall potential, truck order book, roll-out of easyauto123, and market trend look favourable and we maintain a “Buy” at the current price of $3.68

Strategic Objectives (Source: Company Reports)
 

ICAR ASIA LIMITED (ASX: ICQ)

While Carsales.com has reduced its stake in ICQ from 16.5% to 13.3%, ICQ is expected to have better prospects going forward. The group aims to drive digital transformation in the industry across key markets in South-east Asia. ICQ targets to have monthly EBITDA profitability in Q4 2019 while break-even in Malaysia and Thailand expected to be reached in Q4 2018. The group has lowered its cash burn by 20% and has raised funds to grow its position in new car sales category while maintaining position in online used car marketplace. We give a “Speculative Buy” at the current price of $0.205
 

New Car Platform in Malaysia (Source: Company Reports)

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