The company has indicated its core business had strong momentum prior to the impact of coronavirus. As much of the population goes into shut-down, Morgan Stanley envisages a sharp drop in dealer leads, private listings and automotive display advertising.
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.