Automotive Holdings Offloads Struggling Refrigerated Logistics at an Attractive Price
Our AUD 4.00 per share fair value estimate for narrow-moat Automotive Holdings is unchanged, following the decision to sell the underperforming refrigerated logistics division. The segment, which represents around 20% of fiscal 2017 group earnings, will be sold to Chinese conglomerate HNA International, for AUD 400 million. The sale price represents around 11 times EBITDA, substantially higher than the 8 times the group is trading at. We view this as an attractive price, especially given the lac...Automotive Holdings Group is an automotive retailing group in Australasia. Co. has two logistics divisions: Automotive, which operates passenger vehicle and truck and bus dealerships in Queensland, New South Wales, Victoria and Western Australia, and passenger vehicle dealerships in Auckland, New Zealand and Refrigerated Logistics, which provides cold storage and transport operations in every Australian mainland state through Rand, Harris, Scott's Refrigerated Freightways and JAT Refrigerated Road Services. As of June 30, 2016, Co.'s automotive segment had 188 motor vehicle franchises at 108 dealership locations operating within Australia and New Zealand.
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