I Read The News Today Oh Boy! 13-Feb-2018

Tuesday, Feb 13 2018 by

Morning All!

Pendragon ( Pendragon (LON:PDG) ) – 20.9p – £297.6m – PER 6.02

Results For The 12 Months To End December 2017 –  Well, someone was obviously paid well to make these as unclear as possible. Looks like Revenue up about 5% (£4,739m) with PBT down 10% (£65.3m). EPS is down a few percent to 3.7p. Expects 2018 to be in-line with expectations.

This latest update is probably a little better than expected. This is in real value territory here, the yield is a well covered 7% and the PER is just 6.  2 obvious downsides, the Net Debt and the industry in general. Get over those 2 and it’s not looking so bad. Actually Pendragon (LON:PDG), Vertu Motors (LON:VTU) and Cambria Automobiles (LON:CAMB) all seem quite cheap at the moment. Tempting but perhaps not just yet.

Can’t find much else so that’s it from me this morning – What’s your thoughts on the Car Retailers at present?

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Pendragon PLC is an automotive online retailer. The Company's principal market activities are the retailing of used and new vehicles and the service and repair of vehicles (aftersales). Its segments are Stratstone, which consists of its vehicles, truck and commercial vans brand, including the sale of new and used motor cars, motorbikes, trucks and vans, together with associated aftersales activities; Evans Halshaw, which consists of its volume brand, including the sale of new and used motor vehicles and commercial vans; US Motor Group, which consists of its retail operations in California in the United States, including the sale of new and used motor cars; Pinewood, which consists of its activities as a dealer management systems provider; Leasing, which consists of its contract hire and leasing activities; Quickco, which consists of its wholesale parts distribution businesses, and Central, which represents its head office function and includes all central activities. more »

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12 Posts on this Thread show/hide all

MrContrarian 13th Feb '18 1 of 12

My morning smallcap tweet:

Audioboom (LON:BOOM), Ebiquity (LON:EBQ), Itaconix (LON:ITX)

Audioboom Group (BOOM) Proposed acquisition, suspension of trading and trading update: $185m RTO of Triton Digital, 'a leading technology provider to the online audio industry that is headquartered in the USA'. Funded by £155m placing. Triton T/O only $41m, EBITDA $9m. Last 2 months trading performance have been ahead of management's expectations. 10% holder Nick Candy's company Candy Capital has been providing financial and accounting services. I think that's one of the notorious Candy Brothers!
Ebiquity (EBQ) sells Advertising Intelligence division for £26m. Will "focus on the group's faster growing, higher margin, tech-enabled consultancy practices: Media Value Measurement and Marketing Performance Optimization." Trading in line but note "as previously flagged, the revenue performance from its US MVM and MPO businesses were below management expectations."
Itaconix (ITX) FY trading: rev growth slower than anticipated, as already notified to the market. Goodwill associated with the acquisition of Itaconix Corporation has been fully impaired by £6.1m. Earn out (payable in shares) cut from £3.4m to £1.1m.

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tony777x 13th Feb '18 2 of 12

"Actually Pendragon (LON:PDG), Vertu Motors (LON:VTU) and Cambria Automobiles (LON:CAMB) all seem quite cheap at the moment. Tempting but perhaps not just yet."
I think with Brexit far from been settled and sentiment in that industry low definitely for me not yet.

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matylda 13th Feb '18 3 of 12

In reply to post #314593

Well, that's the point really I guess.

How much of Brexit is built in?

Whats the impact of Brexit, everyone is going to stop buying cars?

How knows?

Blog: Briefed Up
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tony777x 13th Feb '18 4 of 12

In reply to post #314603

For me it’s not so much that everyone is going to stop buying cars. More that if we go to WTO rules prices of cars will potentially go up which in turn drives sentiment and potentially sales down

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willhampson 13th Feb '18 5 of 12

Agreed, Tony. I think a number of consumer expenditure stocks don't have a strict no-deal scenario built in to their share price. No political discussion intended but if it does go down that route, I think you'll be able to pick these up much cheaper; assuming you still wanted in.

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Graham Ford 13th Feb '18 6 of 12

With Pendragon (LON:PDG) and the other car retailers is it not as much about a changing market as Brexit? By that I mean tax changes affecting diesels, emissions scandals, a future focus on hybrid or electric vehicles, a potential collapse in trade in values in the future (how many people will actually want to buy your old, second hand, purely internal combustion engine powered vehicle when you next want to change your car), the increase in use of finance plans to purchase vehicles has flooded the market as more people have bought cars in the last few years than would have otherwise done so.

Just too many headwinds at present.

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andrea34l 13th Feb '18 7 of 12

In reply to post #314593

Have said it before and will say it again, I think that Marshall Motor Holdings (LON:MMH) are by far the best value in this sector... which is why I continue to hold - their metrics are way better than many car dealership companies (IMHO)

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Beginner 13th Feb '18 8 of 12

In reply to post #314633

I think the future of the sector is too uncertain, so am staying out. Brexit, diesel, electrification, shrinking margins and manufacturer consolidation are all worries. Having said that I prefer Vertu Motors (LON:VTU) to the others as it holds a large number of freehold premises. We should also recognise that increasingly profits for dealers come less from sales than from credit broking and maintenance. (I did hold Vertu Motors (LON:VTU) but sold recently and too early!)

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matylda 13th Feb '18 9 of 12

Thanks all for the comment, much appreciated.

The great thing is Paul Scott (who is much better placed than I am) intends to do general Car Retailer coverage today - Look forward to it and all contributions over there - https://www.stockopedia.com/content/small-cap-value-report-tue-13-feb-2018-placeholder-314428/

Blog: Briefed Up
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ISAallowance 13th Feb '18 10 of 12

Craneware (LON:CRW) have announced today significant contract wins with two new customers.

I hold.

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ricky65 13th Feb '18 11 of 12

"What’s your thoughts on the Car Retailers at present?" Not good, I must admit. Most of the charts look like what Minervini calls Stage 4 declines.

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Dean Tonna 13th Feb '18 12 of 12

In reply to post #314633

Agreed...and looking at the charts could soon be a great time to buy a few with MACD line heading north...

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