AHG - Automotive Holdings Group

[Muschu]

Recent performance seems pretty strong.... Any opinions? I still retain some aversion to retail...

Thanks [not holding]

 

[galumay]

I remember running my ruler over AHG some time ago, I cant find any notes so I cant see why I passed on it, but there was something that caused me to give it a miss - maybe poor analysis!

 

[skc]

Recent performance seems pretty strong.... Any opinions? I still retain some aversion to retail...

Thanks [not holding]

APE is the other major listed car dealer and they issued a profit upgrade 2 weeks ago which spurred the latest up move by AHG.

Keeping in mind the context though... APE had a profit downgrade back in May's AGM and this latest profit upgrade reverses that downgrade, with strong May/June improvement in auto sales cited as the reason behind the turnaround.

Here's what's interesting... back in May, AHG also announced a profit downgrade as well precisely one day after APE's AGM, so it's somewhat peculiar that AHG hasn't actually made any announcement as yet that their performance has also been helped by the industry tailwind. To me this suggests one of two things... either AHG's guidance remain unchanged (which means they are losing market share and the recent share price strength is unwarranted), or AHG's financial systems are somehow not as sharp as APE's around year end. I can't really find a good reason to think either of this to be true...

I traded AHG long for a few days after APE's upgrade... but I have now closed the position due to the lack of any official announcement from AHG. I do remain quite curious about AHG's upcoming results..

 

[Muschu]

Very much appreciate the comments. Thank you

 

[greggles]

Automotive Holdings Group have downgraded their full‐year operating NPAT today, which is now expected to be approximately $75 million. The company attributed the weaker performance to challenging automotive retail conditions and the timing of the sale of its Refrigerated Logistics division.

As expected, the market has punished AHG, sending its share price down around 10% so far today. It is currently trading at $3.055. There is support at around $2.90 so I imagine it won't get any further than that in the short term. I'm pretty bearish on the automotive industry in general at the moment, so AHG has no appeal for me at all and I expect that it will struggle to make any headway back towards $4.

 

[So_Cynical]

There are so many new cars around, record low interest rates so its never been cheaper or easier to buy a new car, i cant really see how retailing cars can be disrupted, retailing cars requires infrastructure, cars are large and take up space, selling cars is and can be done online and with automation, but the cars have to be warehoused and handled..

 

[bigdog]

Motley Fool reports
https://au.finance.yahoo.com/news/why-automotive-holdings-share-price-234318946.html

Why the Automotive Holdings share price crashed 12% lower today

Automotive Holdings Group Ltd (ASX: AHG) share price has crashed lower on Friday morning.

In morning trade the automotive retail and logistics group’s shares have plunged 12% lower to $1.57.

This means that the company’s shares have now lost almost 55% of their value over the last 12 months.

Why is the Automotive Holdings share price crashing lower?
This morning the struggling company announced that it expects to recognise a non‐cash impairment of approximately $226 million in its half year results which will be released next Friday.

Management advised that the impairment charges relate to the company’s Franchised Automotive business and its Refrigerated Logistics business and reflect a more conservative view of its balance sheet given current market conditions.

The $147 million write‐down in the Franchised Automotive business follows a review focused on the carrying value of its automotive retail franchises, goodwill and intangibles. While the charge was made largely to reflect the soft market conditions across the automotive retail sector, it also relates to some underperforming brands and locations.

The Refrigerated Logistics business will recognise a $79 million non‐cash impairment charge.

The company’s managing director, John McConnell, explained: “The combined effects of regulatory changes to automotive finance and insurance, the negative wealth sentiment in property prices, particularly in Sydney and Melbourne, and the increased and wider tightening of lending practices have all affected the automotive sector.”

Before adding: “A number of acquisitions and investment decisions made in the last decade reflected where the market was at the time. In the current market a number of these investments are not delivering the earnings required to support the carrying value. We are writing these investments back to market and focusing on getting the dealership business match‐fit for when the market cycle inevitably turns.”

 

[Smurf1976]

i cant really see how retailing cars can be disrupted

The big one looming is electric cars.

Sell the car to the customer and that's it, they're unlikely to ever come back to the dealership unless they want to buy another new car.

Servicing is minimal apart from things like tyres which are typically purchased from somewhere other than the vehicle dealer. Parts requirements also not that much other than to repair accident damage.

That lack of servicing, more than the lack of petrol itself, is the defining property of electric cars as compared to petrol or diesel.

Most vehicle dealerships, at least those I've seen, have a petty substantial servicing operation associated with them. That bit probably doesn't have a long term future and I suspect it's where quite a bit of the profits come from. It's still a big thing now but the writing is on the wall.

Of a more immediate nature there's the broader economy and stumbling car sales volumes. Relevant there is that with the fleet age and rate of sales in recent times, a pretty major decline could occur for several years without reducing the number of vehicles in use on the road. That is, a large portion of replacements would seem to be at least somewhat discretionary. Cars aren't driven until they're actually worn out these days - but they sure will be if the economy falters badly enough.

 

[greggles]

A.P. Eagers Limited (APE) has announced today its intention to make a conditional, all-scrip offer to acquire all of the ordinary shares in Automotive Holdings Group Limited (AHG) that it does not already own by way of an off-market takeover bid.

Under the Offer, AHG shareholders (other than foreign shareholders) will receive 1 fully paid ordinary share in AP Eagers for every 3.8 AHG shares owned.

AHG up 15.17% to $2.05 today, well above the price offered by APE for AHG shares. The market appears to be of the view that the current offer by A.P. Eagers is not the end of the matter.

 

[Trav.]

I see that A.P. Eagers Limited has submitted their 7th offer. Not holding but nice run for SH with a BO on news

 

[System]

On September 27th, 2019, Automotive Holdings Group Limited (AHG) was removed from the ASX's Official List in accordance with Listing Rule 17.14, following despatch of compulsory acquisition notices by A.P. Eagers Limited (APE).