UK new car registrations showed year-on-year increases over April/May, although it should be remembered that sales were effectively pulled forward to the first three months of 2017, ahead of the introduction of increased vehicle excise duty. Although there is a growing consensus that, at the very least, the UK auto market may have bottomed out, second-quarter industry comparisons in 2018 are somewhat misleading. Plus, any appraisal of industry volumes would need to take account of the ripple effects of the diesel scandal, together with structural changes in the modes of car ownership.
Against this backdrop, Avril Palmer-Baunack, executive chairman of BCA Marketplace (BCA), remains largely “agnostic”, maintaining that, if anything, market disruption and left-field events can act as sales catalysts for Europe’s largest used vehicle exchange – it’s all about the ‘churn’. And year-end figures to April suggest that the group is feeling no ill-effects from recent industry challenges.
That churn gave rise to a high rate of trade/receivables as a proportion of current assets – that’s to be expected. But rising vehicle volumes also meant that net cash flows from operating activities more than doubled to £142m, enabling the group to hike its final dividend for the year to 5.95p from 4.55p 12 months earlier.
Volumes for the UK vehicle remarketing business, which accounts for 39 per cent of group revenues, increased by 6.5 per cent, feeding through to an 18 per cent rise in segmental cash profits to £98.8m. Perhaps even more impressive, adjusted cash profits for the vehicle buying division increased by 17.9 per cent, largely because of a 12.9 per cent increase in volumes for webuyanycar.com and a 10.2 per cent rise in profits per vehicle, particularly noteworthy given rising wage costs, business rates and insurance premium tax. The result represents “the sixth consecutive year of double-digit volume growth” for webuyanycar.com, aided by a focus on inventory management that reduces “holding risks” for the business, meaning vehicles are sold on the website within an average of 10 days from the point of purchase.
Bloomberg consensus gives adjusted EPS of 11.5p for FY2019, rising to 13.1p in FY2020.
| BCA MARKETPLACE (BCA) | ||||
| ORD PRICE: | 218p | MARKET VALUE: | £1.73bn | |
| TOUCH: | 218-219p | 12-MONTH HIGH: | 240p | LOW: 145p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 145p* | NET DEBT: | 17% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 † | 0.44 | -24.2 | -108 | nil |
| 2014 † | 0.89 | 7.0 | 2.7 | nil |
| Year to 1 April | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 (15-month period) | 1.15 | 3.9 | 1.2 | 6.00 |
| 2017 | 2.03 | 56.4 | 5.2 | 6.75 |
| 2018 | 2.43 | 75.9 | 7.2 | 8.55 |
| % change | +20 | +35 | +38 | +27 |
| Ex-div: | 13 Sep | |||
| Payment: | 28 Sep | |||
| *Includes intangible assets of £1.53bn, or 192p a share. †2013-14 revenue, adjusted pre-tax and EPS from Cenkos Securities | ||||
