- Online growth signals the way forward
- Profits down but underlying margin up
Motorpoint (MOTR) revealed a 29 per cent fall in sales for its March year-end, reflecting prolonged branch closures, which also meant that 69 per cent of vehicles were sold online, against 54 per cent in FY2021.
The group intends to double its top-line by growing its e-commerce revenue to over £1bn through increasing investment in tech marketing and data, though you can assume that the planned expansion is also in response to the launch of online only car dealers like Cazoo. Just over half of Motorpoint's retail sales were online in 2021.
However, the ‘analogue’ side of the business continued to perform creditably when set against the extent of the disruption, and there are also plans to open a dozen new sales and collection branches.
Gross profits slipped to £62.5m, down from £78.9m in the prior year, with the underlying margin up by 90-basis points to 8.7 per cent, as prices were buoyed through pent-up demand at the end of the first lockdown. The balance sheet remains solid, with relatively low borrowings, though given lingering uncertainties the board has decided it is not appropriate to declare a final dividend.
Despite the increased competition in the market, Motorpoint’s B2B relationships and its reputation for being able to rapidly shift fleet volumes hold it in good stead. Long-term buy.
Last IC view: Buy, 310p, 26 Nov 2020
|ORD PRICE:||280p||MARKET VALUE:||£ 252m|
|TOUCH:||277-280p||12-MONTH HIGH:||315p||LOW: 221p|
|DIVIDEND YIELD:||NIL||PE RATIO:||33|
|NET ASSET VALUE:||31p||NET DEBT:||£43.3m|
|Year to 31 Mar||Turnover (£bn)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|