Our opinion on the current state of MOTUS(MTH)Motus (MTH) was unbundled from Imperial (IPL) and separately listed on the JSE on 22nd November 2018. It is a company that owns motor dealerships in South Africa, the UK, and Australia. The company operates through four divisions: import and distribution, retail and rental, motor-related financial services, and aftermarket parts. It imports and sells more than 80,000 vehicles per annum and runs 356 dealerships and 134 rental outlets for Tempest and Europcar. In addition, Motus offers vehicle finance and fleet management services in South Africa, catering to 730,000 clients. The company also retails parts and accessories for older vehicles through 720 franchised outlets. With a 20% share of the South African retail vehicle market, Motus sells approximately 100,000 vehicles per year. It is the importer of brands such as Hyundai, Kia, Mitsubishi, and Renault.
The CEO, Osman Arbee, has indicated that the company plans to pay generous dividends, leveraging its strong cash flows. The company generates 65% of its turnover in South Africa and 93% of its operating profit from this region. On 1st October 2021, Motus announced the acquisition of FAI Automotive in the UK for R550 million.
In its results for the year ending 30th June 2024, the company reported a 7% increase in revenue, although headline earnings per share (HEPS) fell by 28%. The company noted, "The automotive industry is impacted by various factors, including higher-than-normal vehicle and parts price inflation, volatility in the SA Rand against major currencies, high interest rates, and high cost-of-living in all geographies we operate in. These challenges contributed to a strain on consumer disposable income."
Technically, the share price fell from a high above R130 in September 2022 to levels around R80 in April 2024. It has since recovered to R117. With a P:E ratio of 7.91, the share is reasonably priced in our estimation. Motus is a well-established blue-chip company that is somewhat dependent on the state of the economy and consumer spending levels. We believe it will prove to be a good investment, particularly as the economy improves, especially with the anticipated end of load-shedding and the advent of the new government of national unity (GNU).
