# BCA Marketplace PLC  Attractive entry point

- Link: https://www.directorstalkinterviews.com/bca-marketplace-plc-attractive-entry-point/412760415
- Published: 2018-10-24T11:23:35+01:00
- Author: Charlotte Edwards

**BCA Marketplace PLC** (LON:BCA), We note the recent under performance of the shares
of late and believe the current price to be an attractive entry point for investors.
BCA has a portfolio of critical infrastructure products and services which positions
it well in this market, and has scarcity value in our view. We see BCA as a unique
investment opportunity with an undemanding valuation in the context of close peers,
with a reliable yield on offer.

**Used car values robust**: We note the most recent monthly data from BCA Pulse,
showing record used vehicle values in September, up £184 (1.9%) across the board
to an average of £9,881. This data is supported by the most recent Auto trader report
on used car values which showed an average figure of £12,853 in September, a year
on year increase of 5%. Auto Traders data showed that used car prices have risen
at twice the pace of new cars since 2011 (average values in 2011 of £8,977). Robust
used values are indicative of positive trading in the used car market, implying 
a good environment for BCA to deliver revenue growth. We think we will continue 
to see healthy volumes as average stock age is >3 years with rising prices should
ensure robust revenue trends.

**Share price under performance:** The shares have underperformed since the last
earnings announcement (shares down 18% in absolute terms), which we believe presents
an attractive entry point. While there is uncertainty in some of BCA’s end markets
with short term supply disruptions and both OEMs and dealers struggling to maintain
profitability, we believe that BCA represents critical infrastructure in the supply
chain and is well positioned to benefit from current market dynamics.

**H1 forecast**: We expect revenue in H1 of £1,275.9m up 8.9% yoy with adjusted 
EBITDA of £82.7m. We have assumed interest costs for the first half of the year 
of £7.0m resulting in an adj. PBT figure for H1 of £62.8m, implying EPS growth of
13.1%, which we believe is impressive given the current economic environment. We
view this as a conservative set of forecasts given the robust values in the used
market.

**Investment view:** We remain comfortable with our original investment thesis based
on the underlying performance of the business. We continue to believe the growth
potential is significant from here across all divisions, especially in Europe in
future years. We continue to see BCA as attractive critical infrastructure as it
now touches over 10.6m vehicles in the UK supply chain alone and would expect to
see continued growth under most post Brexit scenarios. Overall, we believe BCA Marketplace
continues to offer an attractive mix of organic and income growth as it continues
to leverage its unique market position on a Pan European basis executed by a proven
management team.

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