Carsales.com’s (CAR) interim net profit for the December six months was hit by a sharp fall in revenue from vehicle financing. The online vehicle car classifieds company on Wednesday reported an 8% fall in net profit of $47.2 million for the six months to December 31, with its finance and related services unit posting a 22% revenue.
The company intends to exit its 50.1% interest in Stratton. UBS considers this a positive move as Stratton provided a minor financial contribution relative to the significant effort by management required to deal with the issues.
Carsales has acquired the 50% it did not own of Encar.com in Korea. The broker sees reasonable value at a multiple below that of Carsales currently. Debt funding is not an issue for the broker given the company’s strong cash flows.
On continuing growth in Australian online classifieds, and a corresponding reduction in the volatility of earnings, Deutsche Bank has reduced the discount it applies to its discounted cash flow valuations for relevant stocks.