APE - Eagers Automotive

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

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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 )

i hold APE ( part of the holding was inherited )

will be interesting to see how the market takes this

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.

• 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.

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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.

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

Eagers Humming Along on All Cylinders​

By Glenn Dyer

Earlier this week Peter Warren Automotive revealed the boom for new and used car companies continued in the final half of 2022 even as the supply chain shortages eased and more models became available.

On Thursday, the sector’s major player Eagers Automotive confirmed the continuing longevity of the boom saying there’s more to come as the transition to electric vehicles takes over.

Eagers is the country’s biggest car dealership group with around 11% of the market, and not only is it dominating the conventional car business but said on Thursday that it will be a leader in the transition to EVs through more affordable brands, led by Chinese giant BYD and its fleet of EVs.

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The Company delivered a Statutory Profit Before Tax of $442.2 million for the 12 months to December, down from $456.8 million in 2021 and a record Underlying Operating Profit Before Tax of $405.2 million, up from just over $401 million.
The statutory before tax result included $37 million of net income before tax, predominately relating to the profit on the sale of Bill Buckle Auto Group in Sydney last year.
Revenue dipped to $8.541 billion for the year from $8.663 billion in 2021.
Eagers will pay a record final dividend of 49 cents per share, up from 42.5 cents a year earlier and taking the total for the year to a record 71 cents per share. That was up 13.6% on 2021’s 62.5 cents per share (excluding the special dividend of 8.4 cents per share).
The result was well-liked by investors who sent the shares up nearly 9% to $13 at Thursday’s close.

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In Thursday’s statement CEO Keith Thornton said Eagers’ record underlying profit “reflects the strength of ongoing market dynamics combined with our reset and more productive operating platform, while our record dividend underlines the confidence the Board has in our outlook for 2023 and beyond.
“Our new car order bank grew by 74% in 2022, representing an all-time record level with an extended run-off period and providing material embedded gross profit that will support future trading results.
“The industry is at an inflection point and Eagers Automotive is uniquely positioned to capitalise on its scale and expertise while leading the generational shift towards a lower emission future.”
Sales and orders were boosted by two acquisitions in 2022 – the ACT and Newspot (South Australia) multi-franchised dealership groups and associated property acquisitions were integrated into the Eagers operation.
And Eagers said it set new up strategic partnerships with existing carmakers and new entrants to ensure it is “best placed to lead the industry transition in the high growth new energy and low emission vehicle market.”
In June 2022, the Company announced an on-market share buy-back of up to 10% of issued capital. By the end of December, the company had bought back 1.5 million shares, representing 0.6% of shares on issue at the time of the buy-back announcement. The company available liquidity of $611 million at December 31.

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Looking to the new financial year Eagers’ directors said the company had started “with a very strong foundation for the year ahead. Demand for new vehicles continues to outstrip supply as we transition to a new normal under which the industry operates with a sustainable order bank.”
“While we continue to closely monitor the macroeconomic environment, the Company remains in a very strong financial position and has a record order bank with a significant run-off period.
“We will continue to manage costs closely, driving productivity improvements across the business and leveraging the robust platform built over recent years to underpin a sustainable strong return on sales."

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Dona Ferentes said:

Eagers Humming Along on All Cylinders​

By Glenn Dyer

Earlier this week Peter Warren Automotive revealed the boom for new and used car companies continued in the final half of 2022 even as the supply chain shortages eased and more models became available.

On Thursday, the sector’s major player Eagers Automotive confirmed the continuing longevity of the boom saying there’s more to come as the transition to electric vehicles takes over.

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indeed i was quite bemused to read that

i hold MTO , PWR , VMT and APE and think MTO has the edge towards the 'electrification of private transport ' eventually spreading from electric bike/scooters to mobility-type vehicles as some diversification ( and small commercial vehicles as well )

one might also note APE also increased it's direct property holdings

Eagers Automotive, Australia’s largest car dealer group, reckons rising demand for electric vehicles – especially the Chinese BYD brand – will help it offset an expected softening in sales over the next two years.

The company said in a trading update given to Wednesday’s annual meeting, that back orders for customers still waiting for delivery of their purchases will also help underpin sales.

It sees what it calls a ‘generational shift to EVs’ helping, especially with its retail rights to Chinese brand BYD which is the biggest maker and seller of new energy vehicles in China and the second placed pure battery-EV maker globally after Tesla.

The meeting heard that the company’s full year performance could very well depend on how many vehicles it sells this month and in June which are the traditional big selling months for new cars for tax reasons ahead of the end of the financial year on June 30.

Eagers runs 200 showrooms around Australia for a long list of brands and told the ASX on Wednesday that revenue had risen 9% since the start of the year, while underlying profit for the four months ended April 30 was in line with last year.

CEO Keith Thornton told the meeting that demand continues to exceed supply and Eagers’ order book has grown further through to the end of April 2023.

“This dynamic has been accentuated by the widely reported port delays and bio-security issues that have materially impacted supply and Australian vehicle deliveries in the first four months of 2023.

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“The current top 10 brands by volume in the Australian market, excluding Tesla, are down 10.2% year to date in 2023 (in a total market that is up 2.2% on the prior period) evidencing these unprecedented disruptions.”

(Industry analysts say much of the reason for the fall has been the shortfall of hybrid vehicles from Toyota especially and several other Japanese companies since the start of the year).

“In addition, our business in New Zealand was impacted by two major weather events, centred in Auckland, where we exclusively operate. This has contributed to the New Zealand market being down 15% year to date which has in turn directly impacted 2023 YTD profitability in this region.”

He said Eagers is not immune to the cost pressures that exist across the broader economy. “Upward pressure in all key expense categories, the most notable being interest costs on inventory, continue to challenge our business.”

“Despite the myriad of headwinds that existed in the first four months of 2023, we are pleased to report that underlying net profit before tax for the period to April 2023 is in line with 2022 levels.

“The trading performance reflects stronger gross margins, supported by deliberate and structural cost out initiatives, with the strategic growth initiatives completed in 2022 providing a hedge against the like for like new vehicle supply impacts thus far in 2023.

“These initiatives implemented in 2022 have delivered revenue growth of 9.0% year to date. While this incremental turnover has been dampened by the supply disruptions mentioned earlier, the company’s forecast increase of circa $1 billion in revenue for 2023 remains unchanged,” Mr Thornton told the meeting.

Mr Thornton added that trading in May and June will be crucial for the company as they are usually the two biggest months for new car sales ahead of the June 30 end of financial year. The sales have to be made and delivered from available stocks by June 30.

“In the current environment, our performance in May and June is likely to be more influenced by the number of vehicle arrivals and associated ability for ports to process sold cars in a timely manner.

“It is also worth highlighting however, that June 2023 does represent the end of the current elevated Instant Asset Write Off which requires buyers to have a vehicle delivered by June 30 to qualify.

“This will likely add considerable further impetus to end of financial year sales from unsold stock available for delivery prior to June 30,” he said.

“Given the uncertainty and variability around both these factors it would be inappropriate to provide specific guidance at this stage on our expectations for the first half of 2023, however both factors appear to be favourable to our near-term performance,” Mr Thornton added.

Eagers’ shares eased 4.9% to $12.85 as investors worried about the lack of first half guidance, higher costs and the pressures to try and maximise car sales over the next six weeks, and whether it will have enough stock.

Billionaire Nick Politis has splashed out some $1.1 million in the past three weeks to snap up more of the country’s largest dealership, Eagers Automotive, and take his stake beyond 27 per cent.

Eagers, which operates about 200 showrooms around the country and sells some of the most popular brands from Toyota and Ford to Honda and Volkswagen, also has the local retail rights for Chinese made BYD, the second-largest selling electric vehicle brand in Australia behind Tesla.

Even more intrigue was added on Thursday when Eagers disclosed to the ASX that it had secured a 5.7 per cent stake in McMillan Shakespeare, a salary packaging company that is Australia’s biggest novated lease provider for people wanting to rent vehicles rather than buy them outright.

Eagers says it has no plans for a McMillan Shakespeare takeover. The company is positioning itself for potential commercial tie-ups as it seeks to take advantage of the shift in buyer behaviour as more people look closely at the prospect of owning an electric vehicle.

An orderly pullback and consolidation would be much appreciated here..

Eagers Automotive to expand presence in Victoria with strategic acquisition of large-scale, multibrand dealership portfolio and key strategic properties
• Large-scale expansion adding approximately $1.0 billion in annual turnover
• High-quality, well-balanced brand portfolio representing 12 OEM partners with a weighting towards prestige brands
• Acquisition will add substantial scale to Eagers’ Victorian operations which are forecast to grow to $2.5 billion in annual turnover within this region alone
• Three strategic properties to be acquired as part of the transaction, representing approximately 53,500 sqm in high profile locations in Brighton and Mulgrave Eagers Automotive Limited (ASX: APE) announces that it has entered into a non-binding agreement to acquire a portfolio of dealerships and key strategic properties located across Melbourne and the Mornington region of Victoria from a group of companies associated with Nick Politis.
The acquisition will include the dealership group and three associated properties for a total purchase price of approximately $245 million, comprised of $111 million for goodwill, $100 million for property and $34 million for net assets1 .
The purchase price attributable to goodwill will be paid by the issue of $25 million worth of APE shares2 to the sellers, with the balance to be paid in cash.
The dealership group comprises a high quality, well-balanced portfolio of leading brands including BMW, Jaguar, Land Rover, Mercedes-Benz, MG, Mini, Mitsubishi, Nissan, Renault, Skoda, Volkswagen and Volvo, situated in the key locations of Brighton, Essendon, Mornington, Mulgrave, Port Melbourne and Toorak in Victoria.
The dealerships currently operate across 13 properties, three of which will be purchased by Eagers Automotive as part of the transaction, with the balance to be leased on commercial terms from the sellers and third parties.
The dealership group represents significant scale with annual turnover of approximately $1.0 billion and approximately 770 employees who will remain with the business ensuring a smooth transition for customers, staff and our OEM partners.
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Commenting on the acquisition, Eagers Automotive CEO Keith Thornton said: “To be able to acquire such a high-quality, large-scale business, representing circa $1.0 billion in annual sales or more than 10% of the total revenue of Eagers Automotive, is a compelling and highly valuable opportunity for the company.
It will increase our presence in Melbourne, a region we have previously identified as having significant runway for growth, taking our annual turnover in this region alone from $1.5 billion to $2.5 billion.
The 12 OEM brand partners included in the transaction represent a highquality portfolio including material prestige market weighting. Finally, the inclusion of three strategic properties, representing approximately 53,500 sqm in high-profile sites in Brighton and Mulgrave, will provide the footprint foundation to continue progress against key components of our Next100 strategy.” The transaction is subject to customary conditions precedent including OEM consent, finalisation of due diligence, transaction documentation, finance approval and landlord consents.
The transaction is also subject to shareholder approval due to the relationship between Mr Politis and the various selling entities.
Mr Politis is a member of the Eagers Automotive board of directors and also controls the seller entities.
Eagers Automotive shareholders will be asked to approve the transaction at a General Meeting of shareholders which is anticipated to be held in early 2024.
Further information on the transaction, including an Independent Expert’s Report and property details, will be available for shareholders to consider prior to the meeting. Mr Politis, commenting on industry changes, said: “The automotive industry is evolving as rapidly now as at any time in my career.
This includes new OEMs entering the market, the transition to lower emission cars and trucks and the continuing evolution of automotive retail, all of which create great opportunities. I am convinced larger groups, like Eagers, are best placed to navigate these changes, invest with our key OEM partners and grow materially into the future.
“With $25 million of the purchase price being reinvested in Eagers shares, I personally plan to continue to play an active role as a shareholder and board member of Eagers to help identify and capitalise on the many opportunities ahead.”
1. The value of net assets is an estimate that is subject to customary post completion adjustments.
2. The number of shares will be determined by reference to the volume weighted average price of APE shares traded on the ASX over the 20 trading days prior to the date of this announcement.

-ENDS

i hold APE

Eagers Automotive Limited – Request for Trading Halt

Eagers Automotive Limited (Eagers) requests an immediate trading halt in respect of its shares (ASX Code: APE). For the purposes of Listing Rule 17.1,

Eagers provides the following information:

(a) the trading halt is requested to enable it to manage its continuous disclosure obligations in relation to a cyber incident that it has recently become aware of;

(b) Eagers requests that the trading halt continue until the earlier of a release of an announcement by it in relation to the incident and the commencement of normal trading on Friday, 29 December 2023;

(c) Eagers is not aware of any reason why the trading halt should not be granted; and

(d) There is no other information necessary to inform the market about the trading halt.

Should you require any further information, please do not hesitate to contact me.

Yours sincerely Denis Stark Company Secretary

i hold APE

hmmm

i doubt this will bring them down to my top up price ( $2.xx )

but you never know

.... trading halt is requested to enable it to manage its continuous disclosure obligations in relation to a cyber incident that it has recently become aware of

Moelis analyst Sarah Mann said one area to watch was car dealers because margins had “gone up pretty substantially” over the past couple of years due to a mismatch between supply and demand.

With new car supply finally making a comeback from the pandemic, she said investors should see “a really strong” second half because deliveries were coming through on cars that were sold at the previously high margin.
.
a sugar hit? I note my bellweather value investor (MIR*) has sold down. I wonder if last Feb's jump can be repeated?


* We ( MIR ) also trimmed holdings where valuations had risen with portfolio position sizes looking too high for the value now on offer. This occurred most materially in our positions in ..., Eagers Automotive, ..., ...

Dona Ferentes said:

Moelis analyst Sarah Mann said one area to watch was car dealers because margins had “gone up pretty substantially” over the past couple of years due to a mismatch between supply and demand.

With new car supply finally making a comeback from the pandemic, she said investors should see “a really strong” second half because deliveries were coming through on cars that were sold at the previously high margin.
.
a sugar hit? I note my bellweather value investor (MIR*) has sold down. I wonder if last Feb's jump can be repeated?
View attachment 170193

* We ( MIR ) also trimmed holdings where valuations had risen with portfolio position sizes looking too high for the value now on offer. This occurred most materially in our positions in ..., Eagers Automotive, ..., ...

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i hold APE ( 'free-carried' ) PWR , MTO and VMT

now one thing to watch is the perennially supportive director Nick Politis

i note in recent times he is selling more and more of his personally owned car businesses to APE

Director Interest as of Last Notice​

Substantial Shareholders List As of 27 Mar 2023​

now WFM Motors used to be linked to Nick Politis ( in fact WFM businesses are what he is selling to APE )

so is this some bizarre oversight ( 69 millions shares just disappear in a typo ) or is there something else going on and Nick is retiring to greener pastures

if Nick has stopped buying APE shares in the dips .....

Cyber Incident Update

Eagers Automotive Limited (ASX: APE) (“Eagers Automotive” or “the Company”) refers to its Cyber Incident Update issued on 2 January 2024.

In that update, the Company confirmed that it was investigating the incident, with the support of external experts.
While these investigations remain ongoing, the Company has already informed the market that the incident involved unauthorised access to parts of the Company’s IT systems by a third party, which illegally accessed and removed data.
The Company has now become aware of a claim by the third party suggesting it has published data online that it alleges was removed from the Company’s IT environment.
Eagers Automotive is investigating this claim as part of its ongoing response, which is expected to take some time to complete.

The Company will continue to monitor for any further claims of the publication of data removed from its IT environment.

As part of the Company’s response to the incident, it has undertaken a number of containment and remediation activities.

The operational impact of the IT outages on the Company initially experienced as a result of the incident have been largely mitigated across all regions and business divisions.

The Company will continue to update all relevant stakeholders as further information becomes available.

The Company is progressing with the assessment of the information that the third party has accessed and/or removed from our IT environment and is actively identifying and contacting affected individuals in accordance with its obligations and providing support and guidance.

The Company confirms the financial impact of the cyber incident is not expected to be material for the 2024 Financial Year.

The Company is continuing to engage with the relevant regulators and government agencies, including the Office of the Australian Information Commissioner, Department of Home Affairs and the Australian Cyber Security Centre.

-ENDS

i hold APE ( 'free-carried' )

Now @ 10.24
2 X Book Value
P/E 10

Sure it's got itself ensnared by EVs and worse, Chinese EVs. Maybe they're the origin of the cyber incident? And maybe the consumer is exhausted. But 2 X BV and has reliability as a dividend payer.

Chart? Undecided. Might be treading water before a final downdraft. No auspicious candles I can see yet. It's a watch.

Not Held
Possible buy if lower, not my flavour of business.

WEEKLY

finicky said:

Now @ 10.24
2 X Book Value
P/E 10

Sure it's got itself ensnared by EVs and worse, Chinese EVs. Maybe they're the origin of the cyber incident? And maybe the consumer is exhausted. But 2 X BV and has reliability as a dividend payer.

Chart? Undecided. Might be treading water before a final downdraft. No auspicious candles I can see yet. It's a watch.

Not Held
Possible buy if lower, not my flavour of business.

WEEKLY
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i got spoiled by cheap entry points here ,

first off i inherited some ( so that cost me $55 for the entire parcel) then bought a parcel @ $10.45 .. but then they did a 1 into five share spit ( so $2.09 a new share ) and then bought some more in March 2020 @ $2.64

am absolutely in no rush to add more ( above $2.50 a share )

remember director ( and largest shareholder ) Nick Politis calls himself a 'frustrated real estate investor ' think of the prime land under some of those car dealerships ( the APE owns )

not quite Warren Buffets railway investment rational , but not so far away either

APE still treading water @ $10.58
APE is still cum its interim dividend of 24c, ex date 10/09/24

Market Matters afternoon report:

• Eagers (APE) -1.56% is starting to look interesting again, we covered it this morning and added it to our Hitlist for Income Portfolio.

Not Held

From Market Matters morning report today:

Eagers Automotive (APE) $10.76​

Eagers (APE) is Australia’s largest car dealer and is coming off the back of a tough 12-months, with the shares trading down from ~$16. New car sales have been weak, amplified by too much inventory (after having too little during Covid), particularly within EVs. As is well known by now, EV sales have been weaker than many expected, including Eagers and this has been a headwind for them.

• Last week they reported 1H24 results that showed some promise, and while we have exposure to this theme in the Active Income Portfolio through salary packaging business Smart Group (SIQ), we are adding APE onto our Hitlist.

While there is still more improvement needed, a number of metrics looked good in APE’s update, with orders for new vehicles now running in line with strong deliveries, growth has returned to their online business EasyAuto (EA) and their distribution of BYD vehicles is now back in profit.
Margin pressure remains due to still high inventory, which impacts their borrowing costs (interest expense), and high inventory also increases competition to make sales, which puts pressure on prices, however, Eagers are very good operators, with a huge footprint nationally, and this margin pressure will work through in time.

• APE trades on 11.6x, around 25% below its usual 15.6x, implying these headwinds are largely in the price, while a forecast yield of 6.9% fully franked is appealing for an income focused portfolio. We are just missing am immediate catalyst.

MM is adding APE onto our Hitlist for the Income Portfolio



Eagers Automotive (APE)
LAST UPDATED 04/09/2024 05:56