Franchised motor retailer Cambria Automobiles' (CAMB:AIM) cycle of upgrades has fuel left in the tank, as demonstrates its latest upgrades-triggering trading update. The shares accelerate 7.2% to 52p as Cambria flags a strong start to the year to end-August that leaves trading tracking well ahead of expectations.
In an update accompanying today's annual shareholder meeting (AGM), the £48.5 million cap highlights continuing strong momentum across the piece with trading 'substantially ahead' over the opening four months of the fiscal year. The running Play of the Week continues to benefit from buoyant conditions in a UK new car market which has seen 34 months of growth on the spin. Compelling product and finance offers continue to come the way of an increasingly confident UK consumer, with European manufacturers witnessing weak demand in continental Europe.
CEO Mark Lavery reports new car sales up 11.9% on a like-for-like basis, well ahead of the wider 8.2% UK market growth. The seasoned motor trader expects new car volumes 'will remain robust in 2015', whilst highlighting strong performances in Cambria's used car and aftersales operations. A confident outlook foreshadows interims to end-February speeding in 'significantly ahead' on a like-for-like basis and coaxes analysts into upgrading full-year forecasts, a scenario we flagged here recently. N+1 Singer ratchets up its annual pre-tax profit forecast 6.3% to £6.8 million – which the broker still views as conservative – and August 2016 profits by 4.4% to £7.1 million.
Shares outlined why we believe Cambria is an undervalued market share gain and M&A story here in November. Founded in 2006 as a ‘buy and build’ by Lavery, it has evolved into a reassuringly balanced group of 28 dealerships across England, trading under names such as County Motor Works, Dees and Doves with a portfolio spanning the high luxury, premium and volume parts of the market.
Lavery’s strategy of acquiring and turning around underpeforming dealerships has proved successful. It has also left Cambria with a strong, property-backed balance sheet and the ability to move on acquisitions that will enhance earnings immediately and strengthen the brand portfolio mix.