ASX:SIQ
Smartgroup Corporation Ltd
Investment Summary
The fund managers believe that Smartgroup Corporation Ltd is positioned well for future growth due to its recent South Australian government contract which enhances its salary packaging and novated leasing services. They note that the company’s share price saw strong performance, increasing by 11.4% after the contract announcement, indicating investor confidence bolstered by attractive government incentives and a rise in new car deliveries linked to electric vehicle (EV) adoption. However, the sentiment shifted in May 2024 when another fund highlighted a quarterly trading update that revealed disappointing earnings trends due to unexpected increased expenses associated with the government contract transition. Additionally, they pointed out that electric vehicle penetration dropped in April due to low Tesla sales, which might impact future performance. In their opinion, while the contract presents significant opportunities, the associated costs and current market conditions are potential risks for investors.
Commentary From The Managers
Blackwattle Investment Partners
31 May 2024
$8.18
- Blackwattle Investment Partners notes Smartgroup's quarterly trading update revealed earnings trends that were slightly disappointing compared to consensus expectations.
- The higher expenses reported are attributed to cost estimates related to the transition of the new South Australian Government contract, set to commence in July.
- There was a decline in electric vehicle penetration of new vehicle sales in April, primarily due to abnormally low Tesla sales.
- Despite these challenges, Blackwattle Investment Partners continues to hold Smartgroup as part of its investment strategy.
Milford Asset Management
31 Jan 2024
$9.71
- Smartgroup Corporation Ltd. shares increased by 11.4% following the announcement of a contract with the South Australian government for salary packaging and novated leasing.
- Milford Asset Management views the company's growth prospects positively due to attractive government incentives.
- With the increasing adoption of electric vehicles (EVs), Smartgroup stands to benefit from a boost in consumer interest.
- The company is likely to see further support from a recent rise in new car deliveries.
- Milford Asset Management continues to hold its position based on these positive developments.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.