Traders Quarters

Trade Idea 19 July 2023: MOTUS HOLDINGS

MOTUS HOLDINGS, 9800cps (Buy, price target 12100cps)

  • Motus provide automotive finance, imports and distribution, retail and rental, insurance, auto-part and maintenance services.
  • The group is well-integrated and has a drive to diversify internationally.
  • Foreign turnover will reach around 30% of the total in the next couple of years.
  • Vehicle sales figures recently have shown that the industry absorbed vehicle price increases and remains reasonably robust, supported by the rental industry.
  • The Motus balance sheet is solid and free cash flow is set to pick up in the coming year.
  • Earnings estimates have been revised up continuously during the past year, although the earnings estimate growth between years 1 and 2 is pedestrian.
  • The company is well-placed to take advantage of an interest rate declining cycle which will accelerate earnings growth.
  • The share is attractively priced on a 12-month forward PE of 5.2X, on a dividend discount model and on discounted cash flow valuation.
  • The shares price recently moved into a wedge formation which can break in any direction.
  • We see no reason why the share price should not break to the upside.
  • The first resistance is around 10500cps and then the next level is around 12100cps.
  • We would buy the shares with a target of 12100cps, upwards of 20% upside but keep a stoploss level at 8800cps in the event that there are external factors that we are not aware of.

The graph depicts the price of Motus Holdings the past 2 year.

(Source: Bloomberg)

“This information/research prepared by Sinayo Wealth (Pty) Ltd does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest. The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.”

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