By reading our recent analysis of the motor retail industry, it's clear that this sector is shedding its reputation as a cyclical business. The advent of personal contract purchases (PCPs) - effectively flexible finance loans - means customers are less gun shy about vehicle purchases, and makes motor retailers much more resilient in the face of a possible economic slowdown. This is something Marshall Motor (MMH) boss Daksh Gupta agrees with, and something he says gives him a degree of confidence for the future, particularly post-Brexit.
MMH's first-half results were good, even when benefits from the group's latest acquisitions are excluded. On a like-for-like basis, new car sales rose 3.2 per cent, used cars by 0.9 per cent and aftersales revenue by 6.3 per cent.
Just before the end of the first half, MMH completed its biggest deal to date, the £107m acquisition of Ridgeway Garages which added 30 franchised dealerships - including 13 freehold properties - to Marshall's existing estate. That accounts for the movement in net debt, although the group's leverage still stands at just 0.8 times cash profit.
Analysts at Investec expect pre-tax profit of £24.6m for the year ending December 2016, giving EPS of 23.5p, compared with £16.5m and 15.8p in 2015.
| MARSHALL MOTOR (MMH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 160p | MARKET VALUE: | £124m | |
| TOUCH: | 155-165p | 12-MONTH HIGH: | 213p | LOW: 141p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 178p* | NET DEBT: | 24%** | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 632 | 10.5 | 19.7 | 0.6 |
| 2016 | 826 | 12.1 | 11.6 | 1.8 |
| % change | +31 | +16 | -41 | +210 |
Ex-div: 25 Aug Payment: 23 Sep *Includes intangible assets of £120m, or 155p a share **Excludes leasing loans of £60m | ||||
