Marshall Motor (MMH) is holding its own in an industry beset by woe. That the dealership group ‘outperformed’ the broader market in 2017 might not sound spectacular, given new car registrations across the UK fell 5.7 per cent year on year. But a 5.2 per cent like-for-like boost in used unit sales, and another solid contribution from the aftersales segment, are still commendable; on an underlying basis, pre-tax profit climbed 14 per cent to £29.1m.
This year, the market is forecast to contract by a further 5.6 per cent – a trend exacerbated by tough comparisons with strong buying ahead of last April’s changes to vehicle excise duty. Against this outlook, Marshall’s dealmaking skills will be tested. The M&A focus remains on dealerships with premium brands and affluent postcodes, a strategy now streamlined by the disposal of Marshall Leasing for £42.5m.
That explains the bump in reported profits, although the years ahead may be less bountiful. After modelling for the impact of looming changes in the way property leases must be accounted, Marshall’s balance sheet is set to carry a £125m liability from 2019. This will be amortised in a straight line, incurring a higher depreciation charge than the current £11m rent roll and thereby weighing on the bottom line.
On average, analysts expect adjusted pre-tax profits of £23.1m and EPS of 23.2p in 2018, compared with last year’s estimates of £27.7m and 27.7p.
| MARSHALL MOTOR HOLDINGS (MMH) | ||||
| ORD PRICE: | 174p | MARKET VALUE: | £135m | |
| TOUCH: | 170-178p | 12-MONTH HIGH: | 181p | LOW: 132p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 3 | |
| NET ASSET VALUE: | 247p* | NET DEBT: | 1% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013† | 0.94 | 10.2 | n/a | n/a |
| 2014 | 1.09 | 12.9 | 283 | nil |
| 2015 | 1.23 | 15.4 | 19.7 | 2.98 |
| 2016 | 1.90 | 22.2 | 23.0 | 5.50 |
| 2017 | 2.27 | 53.1 | 63.8 | 6.40 |
| % change | +19 | +140 | +177 | +16 |
| Ex-div: | 26 Apr | |||
| Payment: | 25 May | |||
*Includes intangible assets of £122m, or 157p a share. *Excludes leasing loans of £ †Pre-IPO figures | ||||
