Founded by Edward Eager in 1913, AP Eagers (APE) owns and operates a wide range of motor vehicle dealerships across Australia and New Zealand. The company went public in 1957 under the name Eagers Holdings Limited, merged in 1992 with A.P. Group Limited and was renamed A.P. Eagers Limited. In 2019, it acquired its major competitor, the Automotive Holdings Group.

“APE provided a trading update to April 2022, with revenue +9%; underlying profit before tax (U-PBT) flat on the previous corresponding period (pcp),” Raymond said.

“Revenue growth has been supported by acquisitions, however, supply chain issues (port delays) have impacted the core business (LFL new car deliveries down approximately 7%).

“Gross margins remain strong, but broad cost pressure is evident, which APE is offsetting with structural cost-out initiatives.

“Financial year 2023 revenue guidance (more than $1 billion incremental revenue) was reaffirmed. “The order book continues to grow (in part aided by delivery constraints), with a >two-year run-off expectation.

“We expect demand (softening as expected) to broadly hit equilibrium with supply in the second half of calendar year 2023.

“While underlying earnings are flat to date, the fixed cost nature of the business should see meaningful earnings growth in the half of this year.

“We maintain our Add rating.

“APE is executing on building a sustainably higher earnings base via further consolidation, ongoing efficiency, and new OEM strategies,” Michael said.