Inchcape delivered a strong set of H1 2021 results last week, with adjusted PBT 13% ahead of our forecasts. The Group is trading well across many areas of the business and is delivering margin improvements, strong cash generation, and new contract wins. Last week Inchcape also announced a £100m share buyback programme that it will complete in FY21. We have upgraded our forecasts once again and this flows through to a higher intrinsic value estimate of 1,080p.
Companies: Inchcape plc
Inchcape has delivered a strong set of H1 results, which are 13% ahead of our forecasts at the adjusted PBT level. The Group is seeing strong growth across the group and the operational disciplines put in place are also driving clear margin improvements. New contracts have been awarded, cash generation is very strong and a new £100m share buyback programme has been launched. We will be upgrading our forecasts by at least 10% post the analyst meeting, and we believe Inchcape continues to be well
In this note we focus on five key themes that we believe will shape the motor retail sector in the short-to-medium term. These are digital sales trends, electrification, the agency model, vehicle supply, and the economic outlook. The dealer groups have shown a great deal of resilience and flexibility throughout the Covid-19 pandemic – we expect them to continue to adapt and work closely with OEMs as the industry evolves.
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Inchcape released an unscheduled trading update last Friday stating that the Group’s performance to date has exceeded its expectations. The Group has announced the continuation of encouraging trends across the business, with an uptick in demand and margin resilience. As a result of this update, we upgrade our forecasts for FY21, leaving FY22 and FY23 forecasts unchanged at this stage. This upgrade increases our intrinsic valuation to 1,048p per share.
Inchcape delivered better than expected Q1 results last week and is showing signs of a broad-based recovery across a number of geographies. The Group recently announced its decision to right-size its Russian retail operations with a £70m disposal, set to complete in Q2 2021. We have updated our forecasts accordingly and our intrinsic value increases to 1,045.5p.
Inchcape has delivered a strong Q1 performance, which is trending ahead of expectations in what we see as a broad-based recovery. There is good evidence that most markets are moving in the right direction leading to sequential revenue progress for Inchcape during the quarter, particularly in Asia, which is a high margin area of the business. We have not taken account of the Russian disposal yet but expect this to be absorbed with stronger than expected trading momentum elsewhere. We believe the
Inchcape delivered resilient FY20A results last week that were ahead of our expectations. We remain confident in Inchcape’s long-term investment case as a unique and cash generative model.
Inchcape has delivered a strong set of results that are ahead of our expectations. The outlook statement is positive, albeit clear uncertainties remain, and we are maintaining our below consensus forecasts for now. Overall, we believe Inchcape is well positioned and remain confident in its long-term investment case as a unique and cash generative model.
Looking Ahead At The Next Week
Inchcape has released a trading update this morning, indicating the Group better than expected in November. We believe this activity has come mainly in Europe in Retail, with a knock-on impact in Distribution. As a result, we upgrade our 2020E PBT forecasts by 16% and remain confident in the long-term investment case as a unique and attractive cash generative model.
Post the Q3 trading update last week, we have reviewed our model and made some changes to our core assumptions. Our revenue assumptions were reshaped and reduced by 8.5% for 2020E to reflect the lockdown in UK/Belgium as well as FX pressures in the Americas and Russia. However, given the cost initiatives and underlying margin control/recovery in key areas (notably Retail), our earnings estimates increased by c7% for 2020E. We remain comfortable with the long-term investment case given its cash g
Inchcape has delivered a better than expected Q3 trading update, which reflects an encouraging bounce back, and would have seen it on track to deliver a strong H2 ahead of expectations. However, given the current Covid-19 situation, management have withdrawn guidance. That said, we envisage a small increase in 2020E consensus on the back of this strong Q3 performance and will firm up our forecast assumptions post the analyst call at 8am.
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