Skip to content
chasepost

chasepost

Built General Tough

Primary Menu chasepost

chasepost

  • Technology
  • Home
  • Fashion
  • Education
  • Business
  • Automotive
  • About Us
    • Advertise Here
    • Contact Us
    • Privacy Policy
    • Sitemap
  • Home
  • Eagers Automotive’s Scale Advantage – FNArena
  • Car & Automotive

Eagers Automotive’s Scale Advantage – FNArena

Janelle B. Smith April 1, 2022

[ad_1]

This story features EAGERS AUTOMOTIVE LIMITED. For more info SHARE ANALYSIS: APE

Brokers discuss the longer term strategy for Eagers Automotive and the impacts of shorter term vehicle supply issues.

-Adjustments to the Eagers Automotive portfolio
-Supply chain impacts upon vehicle availability
-The importance of scale
-Potential growth drivers

By Mark Woodruff

Some recent portfolio repositioning by car retail group Eagers Automotive ((APE)) has led to further broker commentary around overall strategy and shorter term vehicle supply issues.

The company intends to purchase the WFM Motors Canberra dealerships and properties for $205m in a deal estimated by Morgans to be 3% accretive for net earnings. The transaction is thought to provide an instant presence and scale in the Canberra market.

Last month, the Bill Buckle dealerships were sold for $92m, in-line with the company’s evolving preference for larger dealership sites that offer improved efficiencies, Ord Minnett commented at the time.

The broker now points to the longer term strategic impact of the WFM Motors transaction, such as creating a true national footprint. It’s felt this strategy was illustrated by the recent agreement with BYD Electric Vehicles (still subject to finalisation) to sell cars around Australia via Eagers Automotive dealerships.

Recycling capital from the Bill Buckle transaction allows for greater market consolidation opportunities and the expansion of easyauto123 (used cars) into the ACT, points out UBS.

After the proposed WFM Motors transaction, four brokers within the FNArena database have updated their research and retained their respective rating and target price for Eagers Automotive.

It appears the bigger picture at present for Eagers is access to new vehicles. Supply remains highly constrained and industry commentary points to this persisting through 2022, points out Morgans.

New vehicle supply

The key to near term earnings, says Credit Suisse, is the supply of new vehicles to the Australian market. It’s felt the main hitch to supply was the shortage of semi-conductors, even before the Russia/Ukraine crisis further impacted upon the supply chain.

Now the broker sees even greater risk to the supply chain from China’s ongoing zero-covid policy and the associated rolling lockdowns that impact upon manufacturing. While Taiwan and Korea are other notable manufacturers, given the starting point is an overall shortage, disruption to any of the regions is thought to create further problems.

In the absence of greater clarity around such risks, Credit Suisse retains its Neutral rating and 12-month price target of $14.60.

Looking at the supply shortage from another angle, UBS suggests the company’s strong order book and limited inventories should combine to support elevated profit margins through 2022. The broker retains its Buy rating and $18.35 target.

Morgans agrees with Credit Suisse that vehicle supply is a major swing factor for FY22. Nonetheless, the broker also believes supply dynamics will support higher gross profit margins for even longer than UBS forecast, to include FY23.

The importance of scale

Industry dynamics will support scale operators longer term, suggests Morgans.

While margins may normalise in the medium-term, the impact may be offset by further consolidation, explains the analyst.

In the case of Eagers, balance sheet strength, ongoing efficiencies and delivery of the used car strategy should also help stave off margin compression.

Outlook

The ongoing rationalisation of the company’s property portfolio, the earnings uplift as easyauto123 matures and further acquisition opportunities present growth drivers for Eagers Automotive, according to UBS.

Bell Potter expects the next potential share price catalyst will be a trading update at the company’s AGM in mid-May. The broker, not one of the seven updated daily in the FNArena database, retains its Buy rating and increases its target price to $17.25 from $16.75.

FNArena’s database has six broker ratings with five Buy ratings and one Hold rating and a consensus target price of $17.32, which suggests 22.5% upside to the last share price.

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms



[ad_2]

Source link

Post Navigation

Previous 6 Spring Cleaning Tips for SEO
Next Deep-dive into NRL’s advanced forward pass technology

More Stories

Flat Rat: A Slammed1950 Ford COE Firetruck On Air
  • Car & Automotive

Flat Rat: A Slammed1950 Ford COE Firetruck On Air

Janelle B. Smith June 29, 2024 0
Oatmeal Baby Products – Reasons to have Faith in this Ingredient
  • Car & Automotive

Oatmeal Baby Products – Reasons to have Faith in this Ingredient

Janelle B. Smith June 19, 2024 0
Focus on PCB Confirmed for 2023
  • Car & Automotive

Focus on PCB Confirmed for 2023

Janelle B. Smith June 15, 2024 0
July 2025
M T W T F S S
 123456
78910111213
14151617181920
21222324252627
28293031  
« Jun    

Archives

  • June 2025
  • April 2025
  • February 2025
  • November 2024
  • October 2024
  • September 2024
  • August 2024
  • July 2024
  • June 2024
  • May 2024
  • April 2024
  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • November 2018
  • October 2018
  • December 2016

Categories

  • Beauty
  • Business & Finance
  • Car & Automotive
  • Computer & Technology
  • Fashion & Shopping
  • Food & Cooking
  • General
  • Health
  • Health & Fitness
  • Home & Improvement
  • Latest News Place
  • Law & Legal
  • Science & Education
  • Travel & Leisure

Recent Posts

  • Do You Really Need Different Cleansers For Day & Night?
  • Creating Digital Spaces That Move Property Forward
  • Henri Alexander Levy: Art Meets Enfants Riches Déprimés
  • The Benefits of Using a Horse Exerciser: Improved Health and Well-being
  • Spring into Love with These Floral-Inspired Ruby Engagement Rings

Fiverr

Fiverr Logo

Tags

American Express Business Cards Att Business Customer Service Att Business Internet Att Business Login Bad Business Codes Bank Of America Small Business Buffalo Business First Business Business Administration Jobs Business Administration Salary Business Analyst Jobs Business Card Dimensions Business Casual Female Business Casual For Women Business Casual Women Outfits Business Ideas 2021 Business Letter Example Business License California Business Name Search Business Process Reengineering Business Proposal Template Buy A Business Card For Business Chase For Business Chase Ink Business Card Columbia Business School Costco Business Center San Jose Emirates Business Class Facebook Business Account Fictitious Business Name Florida Business Entity Search Ga Sos Business Search Georgia Business Search Google Business Email Houston Business Journal Illinois Business Search Instagram Business Account Is Lularoe Still In Business London Business School Marketing Master Of Business Administration Men'S Business Casual Pittsburgh Business Times Qualified Business Income Deduction Sacramento Business Journal
putritrans
grubhubz

You may have missed

Do You Really Need Different Cleansers For Day & Night?
  • Beauty

Do You Really Need Different Cleansers For Day & Night?

Janelle B. Smith June 29, 2025
Creating Digital Spaces That Move Property Forward
  • Fashion & Shopping

Creating Digital Spaces That Move Property Forward

Janelle B. Smith April 9, 2025
Henri Alexander Levy: Art Meets Enfants Riches Déprimés
  • Fashion & Shopping

Henri Alexander Levy: Art Meets Enfants Riches Déprimés

Janelle B. Smith February 11, 2025
The Benefits of Using a Horse Exerciser: Improved Health and Well-being
  • Fashion & Shopping

The Benefits of Using a Horse Exerciser: Improved Health and Well-being

Janelle B. Smith November 26, 2024
Spring into Love with These Floral-Inspired Ruby Engagement Rings
  • Fashion & Shopping

Spring into Love with These Floral-Inspired Ruby Engagement Rings

Janelle B. Smith November 25, 2024
chasepost.net | CoverNews by AF themes.

WhatsApp us