Jump in my car
RESULTS ANALYSIS
Need To Know
- New car order bank remains very strong, deliveries getting quicker.
- Grabbed a further 31% of BYD exclusive dealership.
- Earnings visibility improving, fairly valued in our view.
Investment Implications
1H23 results overview (vs consensus):
Revenue $4,817m vs 4,683m
Underlying profit before tax $207m (+6.3%) vs $201m
DPS 24cps vs 22cps
New vehicle revenue jumped 20% to $3.1bn as the supply chain began normalising hastening delivery of vehicles. Used car sales dropped again to $873m (-3.6%), but Parts and Service revenue jumped 17% to $788m.
Despite an acquisitive few years, the balance sheet remains robust with net debt at $118m (cash $353m), gearing 0.23x and with $559m of property owned.
Outlook. APE said its new order bank consisted of about 180 days supply as at 30 June 2023. New vehicle orders are 63% higher than December 2021.
APE says it is on track to achieve FY23 revenue of ~$9.5bn ($8.5bn FY22).
On 3 July 2023, APE announced it had acquired an additional 31% interest ($50m cash and $20m shares) in EV Dealer Group, the exclusive national retail joint venture with BYD. APE now has 80% of the JV with the rest owned by EVDirect.com.
Investment View
The new vehicle market continues to bulge with new orders and catch-up deliveries. The hype around EV sales is a little over-egged in comparison with the core market, but APE is agnostic about the fuel type on its menu. ‘New Energy Vehicle’ sales in Australia is at approximately 8% of total sales in 1H23 but growing quickly as cheaper Chinese brands create affordable options.
The company is innovating on the way it does business. The development of the AutoMall concept not only brings together multiple brands on a single site, it enables APE to exit leases and lower its cost of capital in doing so. APE’s property portfolio is still skewed to leases but this will take time to evolve.
The new and used car and truck market in Australia is back to normal creating growth opportunities for APE in a competitive market. At 14x FY24 PER, we retain our Hold recommendation.
Figure 1: Australian new vehicle sales
Stock Overview
Share Price
Company Overview
APE is an Australian car dealership company that sells new and used cars, provides service and parts, and offers consumer financing. It has three segments: Car Retail, Truck Retail, and Property.
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