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Marshall Motor Holdings

Strong finish to 2018 expected

Update | Automotive Retailers | 14 Nov 2018

Marshall Motor Holdings (MMH) released a trading update, which indicates that the group’s Q4 performance is now expected to be ahead of management and market expectations. Driven by stronger than anticipated used car sales with healthy margins, PBT is now expected to exceed FY17’s record level for the continuing business. We are increasing our FY18e PBT and EPS by 6.4%. Brexit uncertainty remains at the forefront of FY19 prospects, and as some of the currently favourable market dynamics may wane, we leave our FY19 estimates unchanged. The P/E ratio for FY19 is an undemanding 5.8x.

Marshall Motor Holdings

Reaffirming FY18 outlook

Update | Automotive Retailers | 11 Oct 2018

Following the release of sharply lower UK new vehicle registration statistics for September, MMH has released a trading update reaffirming its outlook for FY18. At the interims the company had been cautious about the potential supply side disruption caused by the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) from 1 September 2018. As it had already factored this in, the expectations and thus numbers remain unchanged. The share price weakness in response to the registrations decline appears unwarranted, with a strong yield providing support.

Marshall Motor Holdings

Record first half but a testing H2

Update | Automotive Retailers | 15 Aug 2018

Marshall Motor’s (MMH’s) ongoing businesses delivered a record H1 profit before tax despite continued challenges in the UK new and used car markets. While comparatives are easing in the second half, new car supply-side constraints may impact in Q3 as new vehicle testing procedures are introduced. We continue to forecast a fall in H2 profitability, but the strength of the H1 contribution and a strong balance sheet lead us to increase estimates modestly by around 3% for this year and next.

Marshall Motor Holdings

Progression in still challenging markets

Flash note | Automotive Retailers | 03 Jul 2018

The company has release its pre-close update for H118, which indicates modest progress has been made against last year’s record period: a commendable performance in still-challenging UK car markets. Despite remaining relatively cautious about the H218 market prospects, management expects the full-year outturn to be at the top end of its expectations. The departure of Mark Raban, the chief financial officer during the flotation, to explore new opportunities would appear to be a personal choice. We expect an orderly transition and do not feel there are any reasons for concern at the decision.

Marshall Motor Holdings

Outperforming its markets

Update | Automotive Retailers | 14 Mar 2018

Marshall Motor Holdings (MMH) delivered FY17 results that exceeded our earnings estimates despite the challenges of softer UK car markets that are persisting into FY18. The dilutive disposal of the leasing activity leaves MMH effectively ungeared and in a strong position to pursue its growth strategy. As previously, we forecast a modest organic earnings decline for FY18, which may be augmented by value-adding M&A if suitable opportunities arise.


Well positioned in sectors with best prospects

QuickView | Construction & Building Materials | 11 Jan 2018

FY17 trading was in line with expectations, with good sector performance in the context of wider industry trends. The CPM acquisition should aid another premium growth year in 2018, beyond which the UK economic outlook should be clearer. Rating premia are earned during growth phases, but can also be sustained during less favourable industry conditions via relative outperformance, and this is what we expect to prevail at Marshalls.

Marshall Motor Holdings

Delivering continued outperformance

Update | Automotive Retailers | 11 Jan 2018

MMH’s pre-close statement indicates that the company continued its strong performance in 2017, despite challenging market conditions that are persisting into 2018. FY17 results are expected to be ahead of previously upgraded pre- and post-tax expectations, and we have lifted our PBT estimate 2% to GBP 28.8m. We have reduced our FY18 PBT estimate by GBP 1m to reflect slight additional margin pressures. The disposal of the Leasing business has strengthened the balance sheet and leaves the company well placed to implement its growth strategy.

Marshall Motor Holdings

Resetting numbers following leasing sale

Update | Automotive Retailers | 27 Nov 2017

Following the recent announcement of dealer portfolio adjustments, and the completion of the strategic disposal of Marshall Leasing, we adjust our forecasts to reflect these events. As previously commented, the leasing deal eliminates MMH’s gross debt and lifts the NAV to GBP 199.5m or 258p per share. It provides financial flexibility to implement the investment programme, including M&A to help mitigate the initial dilution that is seen in FY18e. The dealership closures eliminate losses and reduce turnover by around GBP 40m. Overall, MMH is well positioned as it enters FY18 where market conditions are expected to remain unhelpful.

Marshall Motor Holdings

Polishing the portfolio

Flash note | Automotive Retailers | 21 Nov 2017

MMH has announced a tidying up of its dealership portfolio with six underperforming sites to be closed by the end of the year. While there will be exceptional closure costs of cGBP 6m, the closures will eliminate cGBP 1.3m of operational losses expected in 2017. Although GBP 4m of the cost is cash this will flow out over a number of years against an onerous lease, and the disposal of Marshall Leasing, which has yet to complete, significantly improves the balance sheet. Our underlying numbers remain unchanged and it should be noted that management has not needed to make a trading update despite persistent new car market weakness. The elimination of losses and manufacturer responsiveness to the weaker demand appear to be setting a solid foundation for 2018 numbers.

Marshall Motor Holdings

Leasing disposal augments strategic resource

Update | Automotive Retailers | 21 Sep 2017

Marshall Motor Holdings (MMH) has announced that it will sell its vehicle leasing activity to Bank of Ireland for GBP 42.5m. The net proceeds equate to 33% of the market cap and will leave the company ungeared. The strengthened balance sheet provides increased financial resource with which to pursue its growth strategy in vehicle retail, both organic and acquired, which should reverse the initial dilution. On completion, the net asset value should rise by nearly 25% to around 254p per share, further underpinning the shares.

Marshall Motor Holdings

Strong H1 in a softening market

Update | Automotive Retailers | 16 Aug 2017

As indicated in the pre close trading statement, Marshall Motor Holdings (MMH) made good progress in H117, outperforming a weaker UK new car retail market. While uncertainty remains over the direction of end market demand, management’s growth strategy is facilitated by the strengthened balance sheet. Our forecasts are unchanged and assume ongoing market pressure in the second half of the year, with the rating discount to its peers likely to unwind further on any signs of market resilience during H2.

Marshall Motor Holdings

Trading ahead of expectations

Update | Automotive Retailers | 04 Jul 2017

Marshall Motor Holdings (MMH) released a pre-close interim trading statement indicating that strong trading performance has continued in the current year, despite several potential pitfalls. As a result, we are raising our estimates for the current year and expect continued progress in FY18. The better-than-expected development leaves our fair value estimate unchanged at 214p, progress towards which should become apparent as the delivery of the growth strategy continues despite market concerns.