Six automotive and goods retailing stocks with a rebound

 
Super Retail Group Ltd


SUL Details

Profit growth in segments:Super Retail Group Ltd (ASX: SUL) reported an impressive growth in its business segments for 44 weeks ended to April 2016. Auto retailing rose 6%, Leisure retailing increased 5.5% while Sports retailing reported a highest growth of 9%. Auto and Leisure gained momentum in 18 weeks to April 2016 while sports retailing delivered solid performance as compared to the earlier periods. This performance from the group came as a relief after the disappointment in Group’s half year 2016 results for leisure group which has seen 40% fall in operating profit and $ 20 million of impairment against its brand value for Ray’s Outdoors.
 

Positive outlook (Source: Company reports)
 
The Group invested $3.9 million in start-up digital businesses while $53 million of cash was invested in future growth in new and refurbished stores. The Group declared interim dividend of 20 cents per share. Going forward, the Group has targeted the brand sale increase in each business segment – Auto Circa from 42% to 50% of sales, Leisure circa 36% to 40% of sales and Sports circa 14% to 25% of sales. The stock has fallen 16.82% in the last six months but surged 5.57% in last five days (as at July 13, 2016). We maintain our “Hold” recommendation on the stock at the current price of  $9.35
 

SUL Daily Chart (Source: Thomson Reuters)
 
Automotive Holdings Group Ltd


AHG Details

Expanding penetrations via acquisitions: Automotive Holdings Group Ltd (ASX: AHG) fell 5.54% this year to date but rose 10.36% in the last five days (as at July 14, 2016). The company is growing its car retail division via acquisition and new developments. Furthermore, with economies of scale, the Group managed to reduce its cost and improve profitability of each new acquisition. The Group recently acquired the Lance Dixon Group of dealership at Doncaster in Melbourne, which represents Jaguar, Land Rover, Fiat, Abarth and Alfa Romeo. It has also acquired the Sinclair Hyundai dealership at Penrith in Sydney. It is acquiring City Mazda dealership on high visibility site in South Melbourne which would make a valuable addition to its presence in Victorian capital. The purchase consideration was at $24.4 million for goodwill plus stock and assets at valuations. Post Lance Dixon acquisition, the Group automotive portfolio stands at 185 franchises at 107-dealership locations. Low interest rate and falling oil prices has boosted the rise in car sales. We give a “Buy” recommendation on the stock at the current market price of $4.29
 

AHG Daily Chart (Source: Thomson Reuters)
 
Nick Scali Ltd 


NCK Details

Robust profit guidance: Nick Scali Ltd (ASX: NCK) witnessed a fall as low as 3.6% during end of April 2016 but rose about 13.53% in last three months (as at July 14, 2016). The company guided for FY16 profit guidance in the range of $24-$26 million as against FY15 profit of $17.1 million. For H1FY16, NCK reported 32% rise in sales and 41% rise in profit of $14.1 million. NCK has 48 stores and has a target of 75 stores in Australia and New Zealand. Its Sofas 2Go brand has currently five stores, but plans to grow in higher numbers for coming year. The company has demonstrated growth in business and dividend payout continuously. The interim dividend of 9 cents per share has been declared. However, the stock is trading at a high P/E. We give an “Expensive” recommendation on the stock at the current price of $4.70
 

NCK Daily Chart (Source: Thomson Reuters)
 
AP Eagers Ltd 


APE Details

Aggressive acquisitions: AP Eagers Ltd (ASX: APE) acquired Crampton Automotive Group which includes Toowoomba Holden representing Holden, HSV and Performax in Toowoomba, Queensland; West-star Motors representing Mercedes-Benz, Hyundai, Peugeot and Citroen in Toowoomba; and Port City Autos representing Holden, Subaru, Chrysler Jeep Dodge and Isuzu Trucks in Maryborough/ Hervey Bay, Queensland. APE has also acquired car and truck retail businesses operating as Tony Ireland Townsville. It represents 5 car and Truck brands like Holdern, HSV, Land Rover, Jaguar and Isuzu Trucks and Hyundai Forklifts operating in Townsville of Queensland. The consideration of goodwill and net assets would be between the range of $5.5 - $7 million and would be EPS accretive in 2017. On the other hand, APE stock fell 7.34% this year to date but rebounded 15.71% in the last three months (as on July 14, 2016), and is trading at higher P/E. The stock is “Expensive” at the current market price of $11.79
 

APE Daily Chart (Source: Thomson Reuters)
 
Cash Converters International Ltd 


CCV Details

Strategic efforts:Cash Converters International Ltd (ASX: CCV) has taken strategic decision for future growth perspective which includes repositioning its UK share strategy with planned store divestments to franchisees, divestment of UK loan book, transitioning Carboodle to new secured motor lending business as well as focusing on core Australian business. Furthermore, CCV has secured new banking arrangements according to which the facility covers five years and allows for a drawdown of up to $100 million.
 

Financial performance (Source: Company Reports)
 
Recently, CCV also defended the claims lodged by New South Wales Registry of the Federal court of Australia for borrowers residing in Queensland. Due to this claim coupled with ASX query, CCV stock fell over 21.10% in the last six months but rose 11.7% in the last one month (as of July 14, 2016). We believe the group’s new strategies would able to deliver company’s growth objective and investors may leverage the recent correction in the stock. We give a “Buy” recommendation on the stock at the current price of $0.425
 

CCV Daily Chart (Source: Thomson Reuters)
 
Breville Group Ltd 


BRG Details

Impressive rise in H1FY16 revenues: Breville Group Ltd (ASX: BRG) reported a 12.7% rise in revenues to $331.2 million while NPAT grew 4% to $30.8 million for H1FY16. The group declared an interim dividend of 14.5 cents per share. North America and UK witnessed strong performance while strengthening USD and challenging market conditions impacted Australia, New Zealand and rest of the world’s performance. Going forward, the group expects EBIT to deliver an around mid-single digit growth for FY16 against the FY15. The group has decided to launch a number of new global products, strengthening development cycles and accelerating new product introduction. The stock fell as low as 15.9% during mid of February but rose 20.5% over a period of six months (as of July 14, 2016). We give a “Hold” recommendation on the stock at the current market price of $7.95
 

BRG Daily Chart (Source: Thomson Reuters)

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