The auto retail group at Marshall Motor Holdings (AIM:MMH) enjoyed a vibrant recovery in third quarter trading led by particularly strong activity in September, resulting in stocks gaining around 11%.
Society of Motor Manufacturer and Traders (SMMT) noted that in September the total number of new vehicle registrations fell by 4.4%. In this sense, Marshall Motor Holdings “significantly outperforms the market, with similar new vehicle sales increasing by 18.4% and 33.9% as a result of the strategic acquisitions made in 2019.
Similarly, SMMT reported a 1.1% decline in new vehicle retail registrations in September, but similar vehicle retail sales for the group increased by 19.1%, up ahead of the market, with the total new vehicle retail sales increasing by 38.6%.
Meanwhile, the company’s fleet sales also rose 17.1% on a similar basis, with total fleet sales increasing 23.9%, compared to SMMT’s reported fleet registrations falling 7.4%. Similarly, second-hand car sales increased 15.7% on a similar basis in September, totaling 29.4%.
Overall, total revenues increased 28.0%, up 16.3% on a similar basis. With this progress, the company has changed its year-round guidance from broken to the expected profits of £15 million pre-tax profits.
Marshall Motor Holdings will handle it
Commenting on the optimistic update, Daksh Gupta, CEO of Daksh Gupta, said:
“Our strong culture, brand partnership with scale, internal technology platform and online presence have allowed the group to significantly outperform the wider auto retail market throughout this critical lockdown trading period. In particular, operational performance in August and September was strong across all important new vehicle sales metrics, and has led to considerable growth in both second hand cars sales and after-sale. On behalf of the Board, I would like to thank all my colleagues who have worked tirelessly through these unprecedented times and have contributed to delivering this performance.”
“While this period of positive trading is welcomed due to the significant impact of Covid-19 in the first half of this year, there has been a lot of uncertainty about the trading environment for the rest of the year. We also note that the market in the third quarter was positively affected by demand for new and especially used vehicles, allied with supply restrictions and creating highly positioned favorable conditions. For these reasons, we have taken appropriate measures in terms of limited business closures and restructuring measures to ensure that the group is well placed to meet these potential future challenges.”
Investor’s Notes
After the update, the company’s shares increased by 10.83% or 13.00p to 133.00p at 11:00 BST. Today’s prices represent the highest price for a stock since the start of lockdown, and the price last reached this level at the beginning of March.
The company currently has an AP/E ratio of 5.24 and is given a “underperformance” rating of 61.29% by the MarketBeat community.
