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)
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