Our opinion on the current state of MOTUS(MTH)
Motus (MTH) was unbundled from Imperial (IPL) and separately listed on the JSE on 22nd November 2018. It is a company that owns motor dealerships in South Africa, the UK, and Australia. The company has four divisions: import and distribution, retail and rental, motor-related and financial services, and aftermarket parts. It imports and sells more than 80,000 vehicles per annum and runs 356 dealerships and 134 rental outlets for Tempest and Europcar. It offers vehicle finance and fleet management in South Africa with 730,000 clients and retails parts and accessories for older vehicles through 720 franchised outlets. Altogether, it has a 20% share of the South African retail vehicle market, selling roughly 100,000 vehicles per annum. It is the importer of Hyundai, Kia, Mitsubishi, and Renault.
The CEO, Osman Arbee, said that the company plans to pay generous dividends because of its strong cash flows. The company generates 65% of its turnover in South Africa and 93% of its operating profit. On 1st October 2021, the company announced that it had acquired FAI Automotive in the UK for R550m.
In its results for the six months to 31st December 2023, the company reported revenue up 11% and headline earnings per share (HEPS) down 27%. The company said, "The South African operations contributed 55% to revenue and 66% to EBITDA for the period (2022: 65% and 77%, respectively), with the remainder being contributed by the UK, Australia, and Asia. The Group's passenger and commercial vehicle businesses, including the UK and Australia, retailed 64,076 new units (2022: 66,147), and 43,747 pre-owned units (2022: 43,422) during the period."
In a trading statement for the year to 30th June 2024, the company estimated that HEPS would decrease by between 25% and 35%. The company said, "...consumers are experiencing considerable strain on their disposable income. The higher-than-normal vehicle and parts price inflation, exacerbated by the impact of the weak Rand, has negatively impacted affordability."
Technically, the share has fallen from a high above R130 in September 2022 to current levels around R86. It is on a P:E of 4.78, which makes it reasonably priced in our estimation. We see this as a very well-established blue-chip share that is to some extent dependent on the state of the economy and the level of consumer spending. We think it will turn out to be a good investment, especially as the economy improves and provided the loadshedding problem can be contained.
The CEO, Osman Arbee, said that the company plans to pay generous dividends because of its strong cash flows. The company generates 65% of its turnover in South Africa and 93% of its operating profit. On 1st October 2021, the company announced that it had acquired FAI Automotive in the UK for R550m.
In its results for the six months to 31st December 2023, the company reported revenue up 11% and headline earnings per share (HEPS) down 27%. The company said, "The South African operations contributed 55% to revenue and 66% to EBITDA for the period (2022: 65% and 77%, respectively), with the remainder being contributed by the UK, Australia, and Asia. The Group's passenger and commercial vehicle businesses, including the UK and Australia, retailed 64,076 new units (2022: 66,147), and 43,747 pre-owned units (2022: 43,422) during the period."
In a trading statement for the year to 30th June 2024, the company estimated that HEPS would decrease by between 25% and 35%. The company said, "...consumers are experiencing considerable strain on their disposable income. The higher-than-normal vehicle and parts price inflation, exacerbated by the impact of the weak Rand, has negatively impacted affordability."
Technically, the share has fallen from a high above R130 in September 2022 to current levels around R86. It is on a P:E of 4.78, which makes it reasonably priced in our estimation. We see this as a very well-established blue-chip share that is to some extent dependent on the state of the economy and the level of consumer spending. We think it will turn out to be a good investment, especially as the economy improves and provided the loadshedding problem can be contained.
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