ASG – Macquarie rates the stock as Outperform

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The company has acquired Trivett Alexandria for $9m, which Macquarie suggests is capitalising on a bottom-of-the-cycle valuation.

The deal comprises six luxury/prestige dealerships in Sydney providing exposure to brands such as Jaguar, Rolls-Royce, Land Rover, McLaren, Bentley and Aston Martin.

Incorporating the acquisition results in 4% earnings accretion in FY20 and 8% in FY21, on Macquarie’s calculations.

Coupled with improving industry fundamentals the broker expects this will underpin a positive outlook and maintains an Outperform rating. Target is raised to $1.90 from $1.76.

Sector: Retailing.

Target price is $1.90.Current Price is $1.78. Difference: $0.12 – (brackets indicate current price is over target). If ASG meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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