AP Eagers has reduced its workforce, applied for JobKeeper, been granted rental relief and has deferred all non-essential capex, Morgans notes. Importantly, the company has secured additional working capital facilities, taking its liquidity to $392m, greater than the broker previously assumed.
The outlook for new car sales at this point is not worth considering, but AP Eagers’ liquidity position, experienced management and exposure to whenever they may be a rebound has Morgans upgrading to Add from Hold, noting patience will be required. Target falls to $7.30 from $8.92.
Target price is $7.30.Current Price is $5.14. Difference: $2.16 – (brackets indicate current price is over target). If APE meets the Morgans target it will return approximately 30% (excluding dividends, fees and charges – negative figures indicate an expected loss).