SG Fleet beats broker forecasts

By Trevor Hoey. Published at Aug 14, 2018, in Features

Name: SG Fleet Group Limited (ASX:SGF)

Market Capitalisation: $900 million

Opening Share Price: $3.40

SG Fleet Group (ASX:SGF) has reported a fiscal 2018 profit of $67.7 million, up 13.6% on 2017.

This represented earnings per share of 26.4 cents, placing the company on a trailing price-earnings (PE) multiple of 12.9, a discount to the sector average of 17.

Management declared a final dividend of 9.95 cents per share, bringing the total dividend to 18.7 cents per share, up 11.5% on 2017.

The profit beat Bell Potter’s projections with the broker forecasting a net profit of $66 million.

The result was struck on revenue of $316.5 million, up 7.9% on the previous financial year.

Salary packaging and vehicle leasing

SG Fleet is a leading international mobility solutions provider with operations in Australia, New Zealand and the UK.

The company specialises in fleet management and leasing, as well as salary packaging services.

Growth in both profit and revenue was higher than fleet growth as a result of increased penetration of the company’s add-on products and services within its customer base and higher end of lease income.

One of the key features was the strong full year contribution from the UK business acquired in fiscal 2017.

The economic climate in the UK saw some improvement during the year and this was reflected in an uptick in interest in both tool-of-trade, particularly light commercials, and salary packaging services.

Growth in the current financial year is expected to come primarily from ongoing activities, supplemented by further product and services expansion.

Management noted that many of the products already brought to market are only in the early stages of adoption, and the take-up is now accelerating.

The group also highlighted that it had the head room for acquisitions should opportunities arise.

Note that any decision with regards to adding this stock to your portfolio should be taken with caution and professional financial advice sought.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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