Automotive Group Holdings Ltd

AHG Dividend Details
 
Strong performance by Auto and attractive opportunity: Automotive Group Holdings Ltd (ASX: AHG) recently finished Western Pacific Automotive transaction which had three Mercedes?Benz passenger and van dealerships in Perth. The acquisition worth was over $60?million for goodwill and assets. Meanwhile, AHG delivered a favorable fiscal year of 2015 revenues which rose by 10.8% year on year (yoy) to $5.2 billion boosted by Bradstreet Motor Group and enhanced Auto performance in NSW Queensland Victoria and New Zealand. Accordingly, its operating NPAT rose by 20% yoy to $94.2 million while EBIT margins rose to 3.3% in FY15 as opposed to 0.2% in prior corresponding period (pcp). Automotive Group opened new Daimler Trucks Perth facility which offers a world class sales and service capability in Australia and even finished the development of AHG Service Centre Newman to enhance capabilities in the North West. AHG’s acquisitions Paceway Mitsubishi WA, Leo Muller CJD Qld and Hillcrest Mazda Qld would also continue to drive growth. AHG’s Mercedes passenger car brand addition would improve the group’s reach into the luxury market at WA. The company also provided a trading update for the first four months of FY16 wherein Auto EBITDA of $48.8m has been risen by 13.5% yoy and Refrigerated Logistics EBITDA of $15.3m was up 2.3% yoy, while Other Logistics was down 14% yoy. AHG’s group EBITDA of $68.6m surged 11.5% year to date.
 


AHG Dealerships (Source: Company Reports)
 
The group’s shares have delivered year to date returns of over 10.85% (as at November 23, 2015) and we believe that the group is well positioned to deliver growth through its acquisitions, investments and strategies. AHG is divesting its non-core assets to boost its cash flows. The stock is trading at a P/E of about 14x and a decent dividend yield of about 5%. Based on the foregoing, we remain bullish on the stock with a BUY recommendation at the current price of  $4.25
 
 

 

Carsales.Com Ltd

CAR Dividend Details
 
Acquisitions and investments to underpin growth: Carsales.Com Ltd (ASX: CAR) stock generated a negative year to date returns of 1.66% (as of November 23, 2015), impacted by the subdued performance of its core online advertising revenues.But the stock has been consolidating from the past few months, generating a slight increase of 6.08% in the last three months and rose by 6.80% in the last four weeks. Meanwhile, the group’s domestic dealer revenues soared 7% yoy to $112.9 million in the fiscal year of 2015 as compared to last fiscal year, driven by the dealer automotive enquiry volumes which rose 4.4% on a year over year basis. Overall domestic revenues improved by 8% yoy to $43.0 million during fiscal year of 2015, due to ongoing growth of domestic investment at tyresales in the B2C segment. On the other hand, Carsales.Com has been making strong investment efforts across its international markets to drive its growth in the coming periods and made investments in Stratton, tyresales and Auto Inspect which would start delivering in the coming fiscal years. Carsales along with Stratton acquired 20% of the Ratesetter business, a financier for short term or low priced vehicle finance for about $10 million. CAR is also focusing on building its international business models in Korea and Brazil, and acquired SoloAutos in Mexico, iCar Asia and SKENCARSALES.COM, while purchased a stake in Webmotors, which would contribute to the group’s international performance for themedium and long term. CAR’s investment efforts across its geographies paid off, as the group’s 2015 fiscal revenue surged 31% yoy. Dealers’ network in international segment rose through customer acquisitions as well as improved yield from September dealer price upsurge.
 


Domestic Revenue Performance by Segment (Source: Company Reports)
 
Carsales remains among one of the preferred online destinations in buying as well as selling cars in Australia and its investment efforts across geographies would improve its performance in the coming periods. Carsales.Com has a dividend yield of about 3% and we recommend a “BUY” at the current levels of $10.25
 
 

 

AP Eagers Ltd

APE Dividend Details
 
Growth via acquisitions: The stock of AP Eagers Ltd (ASX: APE) delivered outstanding performance during this year to date, generating over 81.67% (as of November 23, 2015) returns. The group’s revenue increased by 19% yoy to $1,639.5 million during first half of 2015, driven by solid performance of its core car retailing segment despite tough market conditions and contribution from car retail acquisitions. The group reported a profit before tax increase of 29% yoy to $59.5 million during the period while NPAT rose 32% yoy to $44.1 million. AP Eagers continues to strengthen its car retailing business and recently acquired over 12 car and truck brands across several areas in Tasmania and the eastern suburbs of Melbourne for an estimated initial consideration of $114 million. These brands include the state wide representation for Holden, HSV, Hyundai, Citroen, Isuzu Trucks, Volvo Trucks, Mack Trucks as well as UD Trucks in Tasmania, and Mercedes-Benz passenger vehicles in Melbourne’s Doncaster–Burwood-Ringwood corridor.
 


Segments Highlights (Source: Company Reports)
 
The group would even acquire three properties at the Mercedes-Benz business in Doncaster, Blackburn and Ringwood, for over $26.05 million. However, the stock is trading at a high PE ratio and is close to its 52-week high price. Based on the foregoing, we give an Expensive recommendation for the stock at the current price of $10.72
 

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