BETTER THAN EXPECTED RESULTS ..., APPRECIABLE PAYOUT EFFORT
2020 achievements above our forecasts
For the FY 2020, Auto Hall’s revenue stands at MAD 3,948 Mn, down -10.8% against an AGR estimate of -21.5%. At the origin of this outperformance, the good momentum of the DFSK and OPEL brands, whose sales increased by 66% and 44% respectively in 2020.
Despite the activity decline, reported EBITDA remained stable at MAD 455 Mn in 2020, equivalent to a margin of 11.5%, up +1.2 pts. This profitability level takes into account a capital gain on fixed assets disposal of MAD 67 Mn. In the end, the consolidated net income shows a limited decline of -9.4% to MAD 144 Mn in 2020 after recording a loss of MAD -29 Mn in H1-20.
A gain in market share, attesting a relevant commercial strategy
In a context marked by the fall in sales volumes of Private Cars/Light Commercial Vehicles segment by -20% in 2020, Auto Hall significantly outperforms its sector with a sales decline of -1.0% to 20,866 units. Indeed, the Group's flagship brands, namely DFSK and OPEL, rose to the Top 10 sales in 2020, thus strengthening their positioning on the Moroccan market. As a result, DFSK and OPEL market shares improved respectively from 11.0% to 19.9% and from 2.5% to 4.4%.
The operator's activity highly accelerated during Q4-20, with a growth of 24% compared to -4% for the sector. Under these conditions, Auto Hall gains 3 points in terms of market share, going from 12% in 2019 to 15% in 2020.
A considerable effort to remunerate the Shareholder on the stock market
In 2020, Auto Hall maintains a stable DPS of MAD 3.5 against an AGR estimate of MAD 3.0. The stock's D/Y therefore stands at 4.2%, i.e. an attractive spread of 230 BPS compared to 5-year TBs.
The parent company payout is relatively high at 134% in 2020 against an average of 101% over the past three years.
A target price revised to MAD 95 ..., confirming our BUY recommendation
Based on the update of our DDM method and a relatively low WACC of 7.0%, we are revising our target price from MAD 105 to MAD 95 (Cf. Book Afrique 2020).
In 2020, Auto Hall has demonstrated its ability to outperform its sector. To this end, we believe that the operator is well positioned to support the automotive sector’s recovery in Morocco thanks in particular to its investment program aimed at opening 2 to 3 branches per year to achieve a distribution network of 100 branches compared to 67 currently.
Read more.
