# Marshall Motor Holdings plc Analyst Q&A with Zeus Capital (LON:MMH)

- Link: https://www.directorstalkinterviews.com/marshall-motor-holdings-plc-qa-zeus-capitals-head-research-mike-allen-lonmmh-2/412731612
- Published: 2017-07-11T08:30:31+01:00
- Author: Amilia Stone

**Marshall Motor Holdings PLC** ([LON:MMH](https://www.directorstalkinterviews.com/company/marshall-motor-holdings/mmh.l))
is the topic of conversation when Zeus Capital’s Head of Research Mike Allen caught
up with DirectorsTalk for an exclusive interview

 

**Q1: Now Mike, Marshall Motor Holdings, they’ve just put out their pre-close statement,
what are your thoughts on the trading update?**

**A1**: I think it’s a strong statement, it confirms a very good first half performance
and that was particularly driven by a very strong first quarter of the year, I think
that’s a record for the industry as well. The company have indicated that they’re
trading ahead of expectations for the full year, they had delivered modest like-
for-like growth across the core divisions and the Ridgeway acquisition that they
made last year has made a very strong contribution as well which is positive. The
leasing business has experienced good profitability although we think that’ll be
down slightly year-on-year but last year was an exceptional performance for that
division.

 

**Q2: Being a positive update, does this mean that you’ve made some adjustments 
to your forecast?**

**A2**: Yes, we have. We’ve upgraded our 17/18 EPS forecast by about 6%-7% so for
the first half we’re expecting PBT of £18 million versus £14 million last year and
most of that is made up from Ridgeway and the timing impact of having that in the
full period. Our revised upgraded forecast does imply that H2 will be down year-
on-year and that reflects our view of tougher market conditions so we have increased
the forecast to reflect the strong run rate in the first half but I still think 
we’re being cautious in the second half, just given the greater levels of uncertainty.

 

**Q3: So, what are your thoughts on the stock at the moment then for Marshall Motor
Holdings PLC?**

**A3**: We think that the shares look very cheap at the moment, if you look at it
on a perspective PE basis i.e. through to December ’17, PE is on below 5 times at
the moment and the dividend yield is approaching 5% as well. If you look at the 
current market cap of the business, that’s more than backed by freehold and long-
lease hold assets as at the 2016 balance sheet position.

So, I think clearly it is the cheapest motor retail stock at the moment, it doesn’t
have as much liquidity as the others and the free float is low but I think on these
multiples the share price does look compelling at the moment. The business is delivering
against a tougher trading backdrop and the integration of the major acquisition 
last year appears to be going very well.

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