Brokers remain upbeat on
-FY22 results for
-All three brokers in the FNArena database retain an overweight stance
-Management initiates new cost-out program
-Cash holdings provide a natural hedge against funding costs
Brokers in the FNArena database find no definitive reason to justify the near -6% fall in share price for
The best guess by Credit Suisse is the market's 'acknowledgement' of the good performance of CEO
According to media speculation after the results, the company has recently held talks with private equity firms about a buyout. It's believed Russell, a former UBS investment banker who advised
Morgan Stanley also attributes the negative share price reaction to the CEO transition and a -
While Credit Suisse notes few surprises within the FY22 results that were in line with consensus expectations, maximum cash generation continues via elevated EOL income and new business.
FY22 profit (NPATA) rose by 29% year-on-year, due to elevated yields and EOL income, as vehicle supply remains restricted.
The company is one of
Macquarie points out positive jaws were delivered again in FY22, with net operating income (NOI) growing by 4.0% pre-EOL growth, and operating expenses held flat for the third consecutive year despite inflationary pressures.
The NOI growth was supported by a combination of net margin, higher maintenance margins and management fees, observes the broker.
EOL of
Management also announced a -
Interest rate exposure
Macquarie points out
The typical on hand cash balance of
The company estimates a 25bps move in interest rates would impact FY23 annualised profit (PBT) by around -
Outlook
Credit Suisse retains its Outperform rating on a compelling valuation and expectation for FY25 growth, though acknowledges a lack of near-term catalysts for a share price re-rate. The broker also maintains its
Morgan Stanley cites undemanding current multiples, a strong balance sheet, buybacks and organic opportunities to justify its unchanged Overweight rating and
Only small changes were made to Macquarie's earnings forecasts, though the target price falls to
This broker maintains an Outperform rating on the company's underlying performance and expects vehicle supply will normalise. Opportunities are envisaged for both Small Fleet and Novated Leasing, with both segments only having around 2% market penetration.
The average target price in the FNArena database for these three brokers is
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