Motorpoint outlook darkens as discretionary spending tightens

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  • Increase in “well capitalized” competition
  • New advances in e-commerce

Motor Point (MOTR) has seen its stock market valuation plummet by around 40% since the publication of its last half-year figures. That may surprise some industry watchers given that its annual sales easily exceed the pre-pandemic rate. The trouble is that it now faces the twin challenges of high fuel prices and falling discretionary spending. This is a situation which, according to the auto sales group, has “worsened since the beginning of [its] new financial year”, reversing the actions on the day of the results.

It’s difficult to compare the group’s March year-end numbers with those for fiscal 2021, given the scale of pandemic-related business disruptions over the previous year. What can be said is that management’s desire to gain market share has been maintained. Overall market share increased by 70 basis points to 3.1%, although it increases to 7.7% when sales are made within a 30-minute drive of a sales branch. This is significant given that it has opened three new market area locations in what it calls “strategically important regions”, namely Manchester, Portsmouth and Maidstone. That leaves it trading from 17 sales and collection branches, in addition to its B2C and B2B platforms. More brick-and-mortar branches are in sight and the group is almost two-thirds on track to meeting its medium-term goal of generating £1billion in online sales.

Website traffic improved by 15% year-on-year and the group enhanced its marketing and AI skills to capture market share. This may prove more difficult in the future, as “several other large and well-capitalized players” have entered the used-car market, no doubt lured by soaring prices over the past 18 or so months. Numis expects EPS to decline by a third to 12.6p in fiscal 2023, reflecting increased competition in a deteriorating market environment. Hold.

IC Last Seen: Buy, 356p, Nov 25, 2021

MOTOR POINT (MOTR)
ORDER PRICE: 210p MARKET VALUE: £189m
TO TOUCH: 206-210p TOP OF 12 MONTHS: 401p LOW: 194p
DIVIDEND YIELD: nil P/E RATIO: 11
NET ASSET VALUE: 44p NET DEBT: 188%
Year as of March 31 Turnover (in billions of pounds sterling) Profit before tax (millions of pounds sterling) Earnings per share (p) Dividend per share (p)
2018 0.99 20.0 16.0 6.60
2019 1.06 22.9 18.1 7.50
2020 1.02 18.8 16.4 2.60
2021 0.72 9.70 8:40 am nil
2022 1.32 21.5 18.7 nil
% change +83 +122 +123
Ex div:
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