Peter Warren IPO
Peter Warren Automotive Holdings Limited (PWA) aims to raise around US$200m in its Australia IPO.PWA is an automotive dealership group in Australia. It operates 17 dealerships across Sydney, Northern New South Wales and Southern Queensland. The company offers 27 vehicle brands and operates 70 franchises. PWA represents 18 of the top 30 brands in Australia.
PWA gets the bulk of its revenue from new car sales, and it managed to come out of COVID-19 with minimal impact to earnings. Revenue was down 3.34% in FY20 (period ending Jun 20) while NPAT was flat. It also registered a strong rebound in 1H21 with revenue increasing by 6.86% while NPAT was up 4.9x.
On the flip side, PWA has a small market share in a highly fragmented market and its organic growth appears to be slow leaving it dependent on M&A for future growth. In addition, while the offering is being advertised as being a primary offering, most of the proceeds will go to the two controlling families, along with a chunky pre-IPO dividend.
In terms of valuation, PWA has been priced at a discount to Eagers but ahead of Autosports. Looking at its past performance, the stock should trade at a discount to Eagers, and hence, in our view, it offers little upside from the IPO pricing.
Autosports Group is engaged in the sale of new and used motor vehichles; distribution of finance and insurance products on behalf of retail financiers and automotive insurers; sale of aftermarket products and spare parts; and motor vehicle servicing and collision repair services. In addition, Co.'s operations comprised of 29 franchised dealerships, 2 used motor vehicles outlets, and 3 collision repair facilities across 15 different brands.
A.P. Eagers' segments include: Car Retail, which provides a range of automotive products and services, including new vehicles, used vehicles, vehicle maintenance and repair services, vehicle parts, extended service contracts, vehicle protection products and other aftermarket products; Truck Retail, which provides a range of products and services, including new trucks, used trucks, truck maintenance and repair services, truck parts, extended service contracts, truck protection products and other aftermarket products; Property, which acquires commercial properties for its motor dealership operations; and Investments, which includes the investments in One Way Traffic Pty Ltd.
Aequitas Research is a leading ECM research firm with a focus on IPOs and placements/follow-on offerings across the Asia Pacific with deal size of over USD100m.
Hong Kong,
China ADRs,
India,
Japan,
Australia, and
ASEAN.
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