No shakes and rattles
RESULTS ANALYSIS
Need To Know
- FY23 result in-line with consensus.
- Australia now 52% of group EBITDA on pro forma basis.
- Outlook commentary all 'good' which will not shift the market dial, in our view.
Investment Implications
Carsales should be good for another trip around the clock before its next oil change. Financially and operationally, everything is performing as per the owner’s manual. That includes the two recent large additions to the group – Webmotors and Trader Interactive.
FY23 result. CAR increased its stake in Webmotors from 40% to 70% in March this year. On an actual basis, revenue increased 53% to $781m, EBITDA +57% to $425m and net profit +43% to $278m. The final dividend of 32.5cps was 50% franked, bringing the full year dividend to 61cps. Net finance costs have increased due to the higher level of debt, but leverage remains prudent at under 2x.
The core Australian business performed solidly as Dealer, Private and Media segments delivered double digit revenue growth. The market position of the group remains dominant as the used car market showed resilience in the year.
In North America, Trader Interactive has been in the group for over a year now and is delivering on the synergies expected. Margins are expanding and the integration with the Carsales way of doing business is helping to push pricing momentum.
A similar theme is developing in Brazil with CAR now owning 70% of Webmotors since the March purchase of a further 40% stake.
Encar in Korea grew revenue 11% in local currency and 12% EBITDA. Transaction volumes and greater market penetration are driving inventory with listings on site reaching a record high of 180k.
Allowing for the higher number of shares on issue, EPS growth of 17% was a very good outcome.
Outlook. CAR is not very imaginative or prescriptive when discussing its outlook. We interpret the anticipated ‘good’ outcome for FY24 EBITDA to mean approximately 10% growth on a pro forma basis.
Investment View
The Australian business still dominates earnings although the greater investment in USA, Brazil and South Korea collectively is becoming quite meaningful. On a pro forma basis, Australia represented 52% of group EBITDA in FY23.
The result and commentary are unlikely to change consensus forecasts or views on the stock. We retain our Hold recommendation.
Stock Overview
Share Price
Company Overview
CAR is an Australian online auto marketplace, with operations in advertising, data and research.
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