Of­fer­ing great value

Finweek English Edition - - Martketplace - ed­i­to­rial@fin­week.co.za

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.

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