Market Report: Auto Trader revs ahead as Goldman goes unplugged

Simon English
jasonhawkes.com


IF YOU think the hype about electric cars is a bit previous, rather overdone, you are in distinguished company.

The experts at Goldman Sachs drove to the aid of Auto Trader today, slapping a target price of 688p on the windscreen.

This company is a lovely little runner with a good service history. Auto Trader does sell the new breed of cars, but it is the market for second-hand vehicles that has the most chance for upside.

In a note titled Shifting Up a Gear, the Vampire Squid’s top car analysts note that dealers are positive about the used cars market this year, with last December the best for used-car prices in six years. A “pick-up in private equity interest in the space also highlights the structural attractiveness of the sector”, wrote Lisa Yang and colleagues.

A recent deal by US private equity king Hellman & Friedman for HGV fuel provider AutoScout24 was done at 26 times earnings, a result that makes electric vehicles look sluggish. Auto Trader shares accelerated more than 2%, up 13.5p to 587p, leaving the FTSE 100 outfit valued at £5.4 billion.

It was a generally quiet day for markets with Wall Street on holiday for Martin Luther King Day. Asia held on to last week’s gains, but the FTSE 100 slipped 22.26 points to 7652.30, the FTSE 250 was off 53.97 to 21,832.11.

An overnight jump in the oil price should have helped BP and Shell, but trading was sluggish. Production shutdowns in Libya saw Brent crude back over $66 a barrel, before settling back to $65.53, a 1% rise. Shell shares dropped 3.5p to 2261p, BP followed down 0.25p to 496p.

There were signs of hope at M&C Saatchi, the warring ad firm lately in need of a new sales pitch. After a rocky period, it said profits for the year will be in line with the December update of about £21 million. It has £15 million of cash on hand, “an encouraging net cash position”, said the Mad Men fans at Peel Hunt.

In other news, consultancy Bovill said more than a thousand banks, asset managers and insurers in the European Union plan to open offices in postBrexit Britain so they can continue serving UK clients. Perhaps the City of London might just struggle on for a few more years yet.

Small-cap spotlight

CITY financier and Tory backer Edi Truell was typically outspoken over the weekend, telling the Sunday Times that one of his new ventures Ptarmigan was close to reversing into a cash shell, Sabien. Today Sabien, perhaps sheepishly, noted “the press report” and “confirms it is in preliminary discussions”. It would be a reverse takeover if terms are agreed, with the shares now suspended while talks continue. Ptarmigan is a health resort business owned by the Truell family, which is a 25% shareholder in Sabien. Talks are at “an early stage” said Sabien, which seemed to contradict Truell somewhat. Sabien stock was suspended at 0.19p.