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Zeus Capital

BCA Marketplace Plc From dock to beyond – Zeus Capital

BCA Marketplace Plc (LON:BCA) has delivered a strong set of results that are 5% ahead of our forecast at the adjusted EPS level. Strong growth has been made across all four divisions leading to an impressive +31% increase in adjusted EBITDA. Our EPS assumptions remain unchanged, and we are comfortable at the top end of the consensus range. We continue to believe BCA remains well positioned as an attractive structural growth play and is underpinned by a solid dividend yield.

 

H1 results: BCA has delivered strong results, which were 5% ahead of our forecast at the adjusted EPS level. The Group has delivered an impressive 31% YOY EBITDA growth driven by strong organic growth and the successful integration of acquisitions. Cash conversion was 116% and net debt on track vs. our FY assumptions. The interim dividend was +10% and in line with our expectations.

 

Key performance drivers: UK Remarketing was a strong performance with core volumes +8.4% (including SMA) producing YOY EBITDA growth of 23.4%. International Remarketing saw volumes +5.7% YOY with FX rates providing a 11% favourable movement to reported results vs. the prior period. Revenue per vehicle were +19.9% YOY driving revenues +26.5% and EBITDA +33.3%. WBAC continued to deliver strong volume growth ahead of our expectations, which was running at 13.3% during the period, driving revenues +14.3% and EBITDA +6.0%. Acquisitions have been integrated well via Automotive Services, with management also taking decisive action to drive enhanced profitability namely via UK logistics. Group costs were broadly in line with our expectations.

 

Forecast assumptions: We are maintaining our headline EPS forecasts on the back of these results. We have increased volumes in the UK, albeit this is largely offset by slightly higher depreciation and interest cost. We remain comfortable with our assumptions at the upper end of the consensus range.

 

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 Marketplace Plc as attractive critical infrastructure as it now touched over 3.5m vehicles in the UK supply chain alone, and would expect to see continued growth under most post Brexit scenarios. With an attractive dividend yield of 4% following some share price weakness, we would expect the shares to perform well given the attractive structural growth opportunities.