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Lookers

Long term value

Lookers recently delivered a credible set of 2018A results which demonstrated the robust nature of the business model in a challenging market. We maintain our 2019E headline earnings assumptions for now, but take a more conservative view of 2020E earnings, with net debt forecasts higher due to a higher 2018 base. We continue to believe Lookers is well positioned, with a robust balance sheet and proven management team to deliver shareholders returns over the long term.

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  • 19 Mar 19
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Marshall Motor

A strong platform

Following a record set of results recently released by Marshall Motor Holdings (MMH) we update our forecasts to reflect slightly higher levels of net debt in 2019, driven by higher capex (as a result of retaining Lincoln JLR site) and dividend payments. Trading assumptions are unchanged, and we maintain our below consensus earnings estimates. We have assumed dividend per share is flat through the forecast period from 2018A levels, implying dividend cover of 2.6x based on fully diluted adj. EPS and a yield of 5.2% at the current share price. We also introduce our 2021E forecasts, assuming a £0.6m uplift YoY implying adj. PBT of £22.5m. We believe MMH is in a good position in the marketplace, with a strong balance sheet (leverage low at 0.12x) with further consolidation likely.

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  • 15 Mar 19
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Marshall Motor

Record results & dividend +33.4% YOY

Marshall Motor Holdings (MMH) has delivered solid results, which are 1% ahead of our forecasts at the adjusted PBT level. The performance across the board demonstrates outperformance vs. the market, with the change in dividend policy a sign of confidence in its future balance sheet and cash generation. We are maintaining our below consensus estimates at this juncture but believe MMH offers strong value at current levels following this record performance.

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  • 13 Mar 19
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Lookers

Resilient performance

Lookers has delivered a credible performance in the context of significant trading headwinds, achieving strong market outperformance across all three business divisions led by used cars and aftersales. We maintain our forecast assumptions for 2019E and beyond reflecting our more conservative market outlook. While trading headwinds persist, we continue to believe Lookers is well positioned, with a robust balance sheet and proven management team to deliver shareholders returns over the long term

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  • 13 Mar 19
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Strix Group

Completion of HaloSource acquisition

Strix has announced that permission for it to acquire certain assets of HaloSource Corporation was granted by the targets shareholders at a general meeting held in late February. Details of the offer were first announced on the 7 th February indicating a total consideration of $1.3m (c. £1.0m), this has not changed. The assets being purchased relate to two advanced water filtration technologies, that complement Strix’s existing Aqua Optima division, and a reusable consumer product already available to consumers in the US. The deal also includes a high-quality R&D footprint in the US and Chinese production facilities. Revenue synergies will be derived from using Strix existing sales channels to further commercialise the two acquired technologies. Financially, the HaloSource assets will breakeven in FY20 and make a positive contribution to profitability in FY21. In FY19 revenue contribution is expected to be c. £2.0m with a £2.0m P&L investment reducing PBT to £29.7m (prev. £31.7m). Post changes to forecasts, the shares trade on 11.1x FY19 earnings falling to 10.3x in FY20 and yield c. 5%.

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  • 08 Mar 19
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Inchcape

ROCE value play

We remain comfortable with the distribution-led story at Inchcape, which now represent >90% of group profits. We have trimmed our forecasts to reflect the strength of the Japanese Yen and IFRS 16 as flagged in the guidance, which equates to a c5% reduction in 2019E and 2020E EPS. We also introduce of 20201E forecast for the first time, which we believe are cautiously struck, and below that delivered in 2017A. This also excludes the potential for further M&A activity, which to date has been successfully executed.

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  • 06 Mar 19
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