Further to the initial reaction to the strong FY21 result UBS assesses the conditions will continue into FY22. The new car market is expected to remain tight with orders running 10-20% ahead of deliveries.
Used car prices have also remained high, although the company notes margins are tapering.
The main issue for the broker is what business-as-usual looks like once conditions normalise in FY23. UBS upgrades estimates for earnings per share and raises the target to $3.10 from $3.00. Buy retained.
Sector: Retailing.
Target price is $3.10.Current Price is $2.30. Difference: $0.80 – (brackets indicate current price is over target). If ASG meets the UBS target it will return approximately 26% (excluding dividends, fees and charges – negative figures indicate an expected loss).
