ASX:CAR
CAR Group Limited
Investment Summary
The fund managers believe that CAR Group Limited is positioned for significant growth despite recent fluctuations in share price. They note that the US RV market is likely at a trough, indicating potential recovery and material upside leverage as conditions improve. While there are concerns regarding the US business and rate hikes in Brazil, Brazil remains in structural growth with levers to mitigate cyclical weaknesses. Additionally, CAR has been recognized for its successful international expansion, particularly with the acquisition of Webmotors, which is already generating substantial revenue and EBITDA. The fund managers express optimism about CAR's ability to generate strong medium-term revenue growth from its US operations, particularly Trader Interactive, as it leads with a significant audience advantage and untapped product offerings. Overall, they maintain a positive outlook, considering CAR's strategic positioning and market opportunities.
Commentary From The Managers
Milford Asset Management
31 Jan 2025
$40.57
- CAR Group experienced a positive bounce of +12.6%, aligning with trends among high-quality growth names.
- Milford Asset Management notes that the US RV market is likely nearing a trough, indicating potential upside leverage as conditions improve.
- In Brazil, there is a structural growth trend, supported by various factors that can mitigate cyclical weaknesses.
Milford Asset Management
31 Dec 2024
$36.03
- Digital marketplace continues to be a focus for Milford Asset Management
- CAR Group experienced a decline of -13.2%, similar to other high-quality growth names
- Market concerns centered around US business and potential rate hikes in Brazil
- US RV market is likely troughing with potential for significant upside leverage as conditions improve
- Brazil shows structural growth with multiple factors to mitigate cyclical weakness
Blackwattle Investment Partners
31 Dec 2024
$36.03
- Carsales (CAR): Elevated into the ASX 50 Index, leading to reduced holdings from index tracking funds.
- Expectations of shallower rate cycle: Impacts new vehicle funding rates, potentially slowing recovery in Carsales USA business, Trader Interactive (TI) for recreational vehicles and Power Sports.
- Optimism for strong medium-term revenue growth: Particularly in Trader Interactive.
- Market Leadership: Trader Interactive is a clear leader with 3.0x audience leadership over its nearest vertical competitor.
- Growth opportunities: Product offerings in Trader Interactive are nascent compared to Australia, presenting avenues for revenue growth from successful Australian products like media, premium ad packages, and data.
- Expansion into new categories: Opportunity for growth in categories like Boating.
Blackwattle Investment Partners
31 Aug 2024
$37.45
- Car Group (CAR +9%) delivered a strong result, with revenue and income both up +17%.
- Blackwattle Investment Partners views Car Group as an outlier, successfully executing an international expansion strategy.
- This success contrasts with REA Group (REA) and Seek (SEK), which have incurred over $0.9bn in impairments from international investments.
- Car Group’s acquisition of Webmotors (Brazil) is highlighted as a successful case, with $442m capital deployed generating $182m revenue and $66m EBITDA.
- This implies a cash ROC of 15%, with growth exceeding double digits.
- Though it is early for Trader Interactive, Car Group’s largest acquisition to date, promising signs are evident.
- Trader Interactive is a clear leader with 3.0x audience leadership over its nearest competitor.
- There are opportunities to enhance revenue through products proven in Australia, such as media, premium ad packages, and data.
- Additionally, potential growth exists in new categories like Boating.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.