Driven by better-than-expected margin outcomes in the final weeks of the period, Autosports Group’s FY21 profit and revenue were both above the guidance range.
While no FY22 profit guidance is set, management believes the second half FY21 gross profit margin of 17.5%, 200bps above the pre-COVID average is sustainable. while Macquarie has this normalising to 16% in FY23.
Macquarie notes current lockdowns are leading to uncertainty, with 27 showrooms currently closed to customers.
The broker’s earnings per share (EPS) estimate changes of FY22 (up 3.1%), FY23 (up 8.9%), and 8% in outer years from a higher revenue base are partially offset by increased D&A.
Macquarie has upgraded Autosports Group to Outperform from Neutral. Target is raised to $2.70 from $2.50.
Sector: Retailing.
Target price is $2.50.Current Price is $2.26. Difference: $0.24 – (brackets indicate current price is over target). If ASG meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges – negative figures indicate an expected loss).
