Offering great value
A tough set of half-year results from Combined Motor Holdings (CMH), with revenue up 8.8%, but HEPS up only 0.2% at 128.7c. The half-year dividend was unchanged at 61c. Tough vehicle pricing is seeing prices for second-hand vehicles dropping, and this impacts trade-in values. Hence, many customers are keeping cars longer. CMH is also in the rental-car market, where the value of the fleet is lower. Therefore, it’s reducing rates and also keeping vehicles for longer. For the full year, management stated that a zero HEPS growth would be deemed to have “performed well”. The stock itself is down almost 30% since the highs of earlier this year – my House View article (Going full throttle, 10 May 2018) from back then suggested a buy was horridly mistimed. But the stock now trades on both a P/E and dividend yield of around seven and is offering great value. It may even be a potential target for a delisting. ■
*The writer owns shares in Famous Brands.
**finweek is a publication of Media24, a subsidiary of Naspers.