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BCA unfazed by ex-fleet shortfall

The auto re-seller has kept up the 'churn' despite a reduction in ex-fleet volumes
November 29, 2018

By now it would be obvious to most investors that if any correlation exists between the performance of BCA Marketplace (BCA) and the wider automotive complex, it would be tenuous at best. Nevertheless, the owner of WeBuyAnyCar doesn’t operate in a bubble, so the supply issues in the European auto market brought about by tougher emissions standards translated into fewer ex-fleet vehicles coming onto the market. It’s an industry-wide issue, and the bottleneck is likely to persist through the group’s second half, although executive chairman Avril Palmer-Baunack, who recently attracted the ire of shareholders over her £29m bonus, said there were already signs that “the disruption was easing”. Anyway, it’s a case of ‘swings & roundabouts’ where BCA is concerned, because even though dwindling ex-fleet volumes meant less refurbishment work and lower revenues for the services arm, the vehicle shortfall also had the effect of bolstering used car prices.

Any negative effects on the overall financials aren’t immediately obvious, with adjusted cash profits up 13 per cent to £85.4 per cent at the half-year mark, although the underlying margin did come under pressure due to a proportional increase in sales under outsourced re-marketing contracts, whereby BCA takes ownership of the vehicles, giving rise to the recognition of the vehicle sale revenue, which undermines the reported margin percentage. Essentially, this is an accounting effect and says nothing about operational efficiencies. Likewise, with the net operating cash outflow, largely the consequence of a seasonal hike in trade/payables.

The number of vehicles sold through UK vehicle re-marketing continues to rise, with volumes up 3 per cent, reflecting the growing impact of webuyanycar.com, alongside further dealer wins and the growth in outsourced re-marketing contracts. Cash profits per vehicle in the division increased by 14.1 per cent, partly driven by growth in the number of vehicles financed through BCA Partner Finance.

Numis expects cash profits of £172m for the March 2019 year-end, leading to EPS of 12.6p, rising to £187m and 14p in FY2020.

BCA MARKETPLACE (BCA)  
ORD PRICE:214.5pMARKET VALUE:£1.71bn
TOUCH:214-215p12-MONTH HIGH:243pLOW: 145p
DIVIDEND YIELD:4.2%PE RATIO:26
NET ASSET VALUE:144p*NET DEBT:23%
Half-year to 30 SeptTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20171.1734.93.32.6
20181.4345.74.43.0
% change+22+31+33+15
Ex-div:13 Dec   
Payment:30 Jan   
*Includes intangible assets of £1.51bn, or 190p a share