# APE - Eagers Automotive



## System (29 May 2012)

A.P. Eagers Limited (APE) is an automotive retail group focusing on owning and operating motor vehicle dealerships which provide full facilities covering new motor vehicle sales, used motor vehicle sales, service, spare parts and the facilitation of allied consumer finance. APE's main operations are in South East QLD, Adelaide, Darwin, Melbourne, Sydney and the Newcastle/Hunter Valley region of New South Wales.

http://www.apeagers.com.au


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## Huskar (8 May 2013)

What a company - and I only just realised with no commentary at all! Thought I would say something to acknowledge 100 anniversary.

There aren't many companies listed on the ASX that are as old as APE - it is celebrating its 100th year this year, which is nearly as old as the industry itself! It listed in 1957 and has paid a dividend every year since.

In March it reported a 38% increase in NPAT to $55m and EPS of 33.2c. 25% increase in dividend, which is the 11th consecutive year of increases. Unlike many other retailers, it has been relatively immune to the downturn in consumer spending as the high Australian dollar has made new cars the most affordable in 40 years. 

At $4.91 with 15x P/E the company is looking fully valued but certainly not overvalued although one wonders where their growth can keep coming from.

But management is clearly very astute - they pulled off a $140m raid on fellow car retailer AHE which is now worth $200m less than a year later. 

Of course, I bought and sold this twice for small profits without hanging on for the SP run  something I seem to be very good at doing...


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## Ves (19 July 2013)

This company is a bit of a mystery to me -  I cannot really see a competitive advantage at all and the metrics seem to back this up (in the last two years there has been ROIC of 11-12% and before that it was under 10% for 2008-10). Margins are low.

They seem intent on ramping up their acqusitions funded by a mix of debt and equity in the last 10 years.  And this makes sense as organic growth from car dealerships and after sales services is traditionally limited. It's not a scalable business, it's about owning the most turf to gain market share and to do that you need to keep buying new assets. Working capital costs are also very high as funds as tied up for long periods of time.

If you look at the 20 year chart there seems to have been a serious re-rating of this stock post-GFC - there has been a big spike in the last two years especially. Earnings growth has been high in these years too.

I am aware of Hesking's comments regarding the dollar and the stellar performance of car sales data over this period. I'm also aware that they have been expanding their ownership of dealerships pretty quickly.

EBIT from continuing operations for the 2013 FY will most likely come in at around $110m (based on their market guidance of 7.5% profit increase in June).

EV =   $775m (market cap)  +  $520 debt (factoring in the acquisitions this half)  =  $1.3B

That's an EBIT / EV of 12!   Is the current growth sustainable?  How close are we to the top of the car industry cycle?  What effect will the falling AUD have?

It looks pretty pricey to me - unless there is improved ROIC over time, this business needs a lot of capital to grow.


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## peter2 (1 May 2018)

Daily chart looking promising. Beware, this is very thinly traded but suitable for a medium term hold.






_Disclosure:_ I'm already holding some and considering buying more.


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## Trav. (1 December 2019)

I am having a play with stopping volume and I found a good example via my scan.

After news SP dropped 8% then found some support @ $9.99 for a couple of bars then dropped again to $9.45.

If I was to trade this I would place order just above the $10 mark then look for the SP to rebounding a bit to cover initial drop in SP. 

Thoughts??


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## Trav. (2 December 2019)

Closed @ $10.06 today so looking good to continue recovery.

Not held


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## barney (2 December 2019)

Trav. said:


> I am having a play with stopping volume and I found a good example via my scan.
> Thoughts??




It does have some appeal Trav.

The punter in me says the initial drop (forceful) just prior to this potential rebound will mean there should be some mini pushes in both directions before a reverse trend will/might be formed.

If the $9.55 level on the 26th Nov happens to get re tested over the next few days, it would represent a nice low risk entry. May never happen of course, but if it jumps to $10.30 quickly I think there will also be some resistance for a retest.


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## Trav. (13 December 2019)

APE will be added to the ASX200 later in the year which should be good for it as it has recently failed to continue my BO hope and fallen through some support levels.

A couple of recent green bars has stemmed the bleeding so we will see if it can continue with a small recovery.

Holding a very small position on this one.


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## Trav. (16 December 2019)

Back above $10 again. Hopefully APE can stay in this teritory (preferably above) for a while.

Directors have bought recently as well which shows some faith in company.


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## Trav. (17 December 2019)

I can't take a trick here. Just when I think we are in for a good run this comes out. I'm sure that we will see a drop this morning.


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## Trav. (17 December 2019)

Well that was a pleasant surprise. I truly expected and RED day following that announcement above.


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## barney (17 December 2019)

Trav. said:


> Well that was a pleasant surprise. I truly expected and RED day following that announcement above.




Lol … sometimes there is just no logic to the market …  Speaking of Shorting … I remember years ago when Boral put a really poor announcement out on the state of the Company/profits etc, I thought I was going to make a killing on got on early (Short).

Can't remember exactly how much it went up that day but it was well over 5% ….. Just another valuable/expensive lesson back then


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## galumay (17 December 2019)

I suspect the price rise is mainly due to the inclusion of APE in the index, it means ETF's have to buy parcels and in a tightly held business like APE that puts significant pressure on price. (another side of 'passive' investing risk that most have no idea of.)


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## Trav. (17 December 2019)

galumay said:


> I suspect the price rise is mainly due to the inclusion of APE in the index, it means ETF's have to buy parcels and in a tightly held business like APE that puts significant pressure on price. (another side of 'passive' investing risk that most have no idea of.)



I think that they don't actually join until the 23/12 (post #8 above) but happy to take any reason for green.


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## galumay (17 December 2019)

ok, well maybe its speculation about the likely impact of inclusion in the index! Given how frothy this market is, thats not unlikely!


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## Trav. (23 December 2019)

galumay said:


> well maybe its speculation about the likely impact of inclusion in the index!




I think that you are on the money here as the volume on Friday was massive compared to anything this year.






still holding


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## System (17 August 2020)

On August 17th, 2020, A.P. Eagers Limited changed its name to Eagers Automotive Limited.


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## Dona Ferentes (28 July 2021)

Eagers says it expects to post a record underlying operating profit before tax of $218.6 million for the six months ended June 30, versus $40.3 million for the lockdown hit prior corresponding period.

On a statutory basis, the NPAT from continuing operations is expected to be $267.4 million.



> “_The new car market continues to rebound from the initial onset of COVID-19 with a 28.3 per cent increase in the new car market compared with the first six months of 2020,” the company said. “These market dynamics are further buoyed by demand continuing to materially outstrip supply.”_




_back above $16_


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## mullokintyre (24 September 2021)

For years APE was a very thinly traded stock with usually less than 100k in trade volume per day that paid dividends.
I held it for quite a few years from about 2008 .
It fitted my investment profile when I had a full service broker.
I sold when we started doing our own trades.
For some reason back in mid 20919 the volume in this stock absolutely took off, as the stock price got crunched from a high of 14.40 odd  in September 2019 to fall to a low of a tad below 3 bucks in the early  2020  COVID crash.
Days of multi million volumes became the norm
Still has high trade days but has recovered to sit above 15 bucks.
Kinda keen on it, but  not sure of the retail vehicle business model will  make the grade.
Anyone have opinions on APE??
Mick


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## mullokintyre (22 March 2022)

Obviously , no one else interested in APE, but I have been quietly accumulating some below$13 in a thin market.
APE will be the importer of the BYD vehicles from China, renamed Atto3 for Oz, so it may get a bit of a boost over the long term.
Its paid a regular dividend, sitting on a yield of 4.6 %, however it does have high levels of debt, and depending on its structure, may pose a problem if the RBA finally starts to raise interest rates.
Mick


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## divs4ever (22 March 2022)

mullokintyre said:


> Obviously , no one else interested in APE, but I have been quietly accumulating some below$13 in a thin market.
> APE will be the importer of the BYD vehicles from China, renamed Atto3 for Oz, so it may get a bit of a boost over the long term.
> Its paid a regular dividend, sitting on a yield of 4.6 %, however it does have high levels of debt, and depending on its structure, may pose a problem if the RBA finally starts to raise interest rates.
> Mick




 i wouldn't say uninterested   , just focused elsewhere 

 the core of my APE holding has been in the family for decades  POSSIBLY  since the mid '70s  however i did buy some extra in October 2011 ( $10.54  .. pre-share'split so $2.09 a new share ) and added more in March 2020 @ S2.64 )  obviously i have recovered the investment cash since  but APE is still a top 5 holding for me 

 BTW  APE also owns a fairly large proportion  of the property under those car yards ( but not all of it )  in fact one former director used to call himself  a  frustrated real estate developer 

 this has out-performed my expectations after March 2020  , but a BIG factor in that  is a major share-holder that keeps adding a few more from time to time ( already holds more than 66 million shares )

 so there is always that risk ( M. Politis will sell down at some stage )


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## divs4ever (12 July 2022)

i hold APE  ( part of the holding was inherited  )

 will be interesting to see how the market takes this


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## mullokintyre (12 July 2022)

APE issued preliminary profit reult with an expected profit of 246 mill, a little ahead of the upper guidance limit of 240 mill.
I like companies that beat forecasts, even if its only a small amount.


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## Dona Ferentes (25 August 2022)

Record interim dividend payout of 22¢ per share, up from 20¢ a year ago e
Net profit after tax slipped by 12.4 per cent to $171.1 million for the six months ended June 30.



> _Supply constraints, where it simply can’t get enough deliveries of new vehicles because of a global shortage in the automotive industry caused by semiconductor shortages, were a large factor in the profit decline_*.*




CEO Keith Thorton said the shortage of supply of new vehicles means long waiting times still exist for many models. He said the new order backlog at the end of June was 32 per cent above that of December 2021.

He also said the changes in federal government policies, and a general shift in consumer preferences, will prompt a steady swing toward lower emission vehicles. But he said it would take time because *Australia is a nation of ute and SUV buyers.*


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## mullokintyre (1 November 2022)

Sold out of my APE this morning.
Partly due to the debacle with the BYD delays and the EV direct threats to journalists, partly due to the general holdups in all forms of vehicle deliveries, and partly due to the  uncertainty over  the world economy, partly due to problems in China (perceived and real).
Took a small loss, but my risk reward criteria were tipping too far to the negative.
Mick


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