Ahead of expectations
An excellent end to the year has encouraged us to lift our 2012 profit estimates again. However, the share price has drifted back by 4% since we published our update note on 31 October 2012. With the impact of new investment following the strategic review of operations and a number of exciting new product introductions expected in 2014, this drift offers a medium-term buying opportunity.
Strong end to 2012
H R Owen has reported a strong end to 2012, as evidenced by the SMMT figures showing Bentley (40% of group revenues) registrations sharply ahead in December and up by more than 22% over the full year. The group also reports good final-quarter sales on Rolls-Royce, Ferrari and Lamborghini. With H R Owen generating full sales incentives on these key marques, our indication that the revised estimates shown in our October update may prove conservative has been reinforced. We are raising our underlying pre-tax profits estimate from £1.9m to £2.2m.
Conditions still challenging
UK consumer markets remain challenging, while the introduction of new models in 2013 will be heavily skewed towards the second half of the year. Interim profits will be lower than in 2012 and it is doubtful whether the shortfall will be made up in the second half. However, action taken by management over the past 12 months reinforces our medium term confidence and we have nudged our full-year 2013 target up by £0.2m to £1.9m. As previously indicated, we are confidently looking ahead to the following year, when further new models are set to be introduced. On the basis of indications from the OEMs, we are hopeful that 2014 profits will be sharply higher, but we await a firming up of timetables before lifting our target above the indication of at least £3.0m pre-tax (EPS 9.3p) mentioned in our earlier report.
£7m available for investment
The balance sheet remains strong. While there will be the usual debt related to and secured against inventories, cash balances remain at around £7m and are available for new investment opportunities that may arise in the immediate future.
Valuation: Unique business with attractions
H R Owen has, until recently, been accorded a substantial premium rating in the automotive retail sector to reflect its unique product and customer bases. The 7.2x prospective rating implied by our 2014 profits indication is at a 24% discount to the 9.5x average of the four leading quoted dealership groups.
To Read the Entire Report Please Click on the pdf File Below.
An excellent end to the year has encouraged us to lift our 2012 profit estimates again. However, the share price has drifted back by 4% since we published our update note on 31 October 2012. With the impact of new investment following the strategic review of operations and a number of exciting new product introductions expected in 2014, this drift offers a medium-term buying opportunity.
Strong end to 2012
H R Owen has reported a strong end to 2012, as evidenced by the SMMT figures showing Bentley (40% of group revenues) registrations sharply ahead in December and up by more than 22% over the full year. The group also reports good final-quarter sales on Rolls-Royce, Ferrari and Lamborghini. With H R Owen generating full sales incentives on these key marques, our indication that the revised estimates shown in our October update may prove conservative has been reinforced. We are raising our underlying pre-tax profits estimate from £1.9m to £2.2m.
Conditions still challenging
UK consumer markets remain challenging, while the introduction of new models in 2013 will be heavily skewed towards the second half of the year. Interim profits will be lower than in 2012 and it is doubtful whether the shortfall will be made up in the second half. However, action taken by management over the past 12 months reinforces our medium term confidence and we have nudged our full-year 2013 target up by £0.2m to £1.9m. As previously indicated, we are confidently looking ahead to the following year, when further new models are set to be introduced. On the basis of indications from the OEMs, we are hopeful that 2014 profits will be sharply higher, but we await a firming up of timetables before lifting our target above the indication of at least £3.0m pre-tax (EPS 9.3p) mentioned in our earlier report.
£7m available for investment
The balance sheet remains strong. While there will be the usual debt related to and secured against inventories, cash balances remain at around £7m and are available for new investment opportunities that may arise in the immediate future.
Valuation: Unique business with attractions
H R Owen has, until recently, been accorded a substantial premium rating in the automotive retail sector to reflect its unique product and customer bases. The 7.2x prospective rating implied by our 2014 profits indication is at a 24% discount to the 9.5x average of the four leading quoted dealership groups.
To Read the Entire Report Please Click on the pdf File Below.