- Online growth shows the way
- Lower profits but higher underlying margin
Motor point (MOTR) revealed a 29% drop in sales for its year-end in March, reflecting extended branch closings, which also means 69% of vehicles were sold online, up from 54% in the last year. ‘fiscal year 2021.
The group intends to double its revenue by taking its e-commerce revenue to over Â£ 1 billion through increased investment in technology and data marketing, although you can assume that the planned expansion is also in response to the launch of online-only auto dealers like Cazoo. Just over half of Motorpoint’s retail sales were online in 2021.
However, the âanalogâ side of the business has continued to function honorably for the extent of the disruption, and there are plans to open a dozen new sales and collection branches as well.
Gross profit fell to Â£ 62.5million from Â£ 78.9million a year earlier, with an underlying margin up 90 basis points to 8.7% as prices were supported by pent-up demand at the end of the first lockdown. The balance sheet remains strong, with relatively low borrowings, although given the lingering uncertainties, the board of directors decided it was not appropriate to declare a final dividend.
Despite the increased competition in the market, Motorpoint’s B2B relationships and reputation for being able to move fleet volumes quickly hold it in good stead. Long term purchase.
Last seen IC: Buy, 310p, Nov 26, 2020
|ORDER PRICE:||280p||MARKET VALUE:||Â£ 252 million|
|TO TOUCH:||277-280p||UP TO 12 MONTHS:||315p||LOW: 221p|
|DIVIDEND RETURN:||NIL||P / E RATIO:||33|
|NET ASSET VALUE:||31p||NET DEBT:||Â£ 43.3 million|
|Year to March 31||Turnover (Â£ bn)||Profit before tax (Â£ m)||Earnings per share (p)||Dividend per share (p)|