Australia's Eclipx among top picks in auto sector - Morgan Stanley

FleetPartners

13/03/2023 03:33

** Australia's fleet leasing firm Eclipx  ECX.AX  would be
among top picks for mid-cap companies in the auto sector,
analysts at Morgan Stanley say, citing strong demand and robust
earnings visibility from pending orders
    ** Says continued strength in used prices, together with
some incremental improvements in supply will help ECX deliver
another strong first half 
    ** Further, the end-of-lease (EOL) income will likely see
ECX continue elevated share buybacks at above 8% every year 
    ** Shares in ECX slipped as much as 5.1% to A$2.050
    ** "There were multiple times over the past 3-4 years when
investors questioned business continuity, yet ECX divested all
non-core assets, returned the core to growth, repaired the
balance sheet, and will have bought back a cumulative A$128m
worth of shares," - MS
    ** Says lower EOL from lower unit disposals and higher
maintenance costs may act as key risks  
    ** Stock up 8.3% this year, as of last close, vs a 1.51%
increase in the benchmark S&P/ASX 200 index  .AXJO  


 (Reporting by Roushni Nair in Bengaluru)
 ((Roushni.Nair@thomsonreuters.com;))