Our opinion on the current state of MTH

Motus (MTH) was spun off from Imperial Holdings and made its debut on the Johannesburg Stock Exchange (JSE) on 22nd November 2018. As a standalone entity, Motus operates a comprehensive motor vehicle business, with its activities spanning across South Africa, the United Kingdom, and Australia. The company is organized into four main divisions: import and distribution, retail and rental, motor-related financial services, and aftermarket parts. It has an impressive portfolio, importing and selling over 80,000 vehicles annually, managing 356 dealerships, and operating 134 rental outlets under the Tempest and Europcar brands. Additionally, it provides vehicle finance and fleet management services to approximately 730,000 clients in South Africa and retails parts and accessories for older vehicles through 720 franchised outlets. With a 20% market share in the South African retail vehicle sector, Motus is a significant player, selling around 100,000 vehicles per year and serving as the importer for notable brands such as Hyundai, Kia, Mitsubishi, and Renault.

The company's leadership, under CEO Osman Arbee, has committed to distributing generous dividends, supported by robust cash flow generation. Despite generating the majority of its turnover (65%) and operating profit (93%) from its South African operations, Motus has demonstrated its capability to expand and operate successfully internationally. This is evidenced by the acquisition of FAI Automotive in the UK for R550 million on 1st October 2021.

For the six months ending on 31st December 2023, Motus reported an 11% increase in revenue, although headline earnings per share (HEPS) decreased by 27%. This period saw the South African operations contributing 55% to revenue and 66% to EBITDA, with the international operations making up the balance. The company's vehicle businesses across all regions retailed 64,076 new units and 43,747 pre-owned units during this timeframe.

The share price experienced a significant dip from its initial listing price of R95 to around R34 in the aftermath of COVID-19. However, it subsequently emerged from this downturn, forming an "island" formation before entering a new upward trend. Currently trading at a price-to-earnings (P:E) ratio of 4.69, Motus presents itself as a reasonably priced investment. This positioning, alongside its status as a well-established blue-chip company, suggests its potential for good returns, especially with improvements in the economy and assuming challenges such as loadshedding can be effectively managed.