Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

NZ Automotive Investments / Equity Capital Markets

NZ Automotive Investments Limited (NZAI) aims to list on the New Zealand exchange via a direct listing on 25 February 2021.
NZAI is a used automotive business operating throughout New Zealand. NZAI’s business is split across two divisions: Automotive Retail and Vehicle Finance. The Automotive Retail division was founded in 2011 and it operates under the “2 Cheap Cars” brand. The vehicle finance division was founded in 2019 and operates under the “NZ Motor Finance” brand.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/190/684/original/image_76392135521614215079926.png?1614215080" class="editor-image img-responsive" data-smartkarma-image-id="190684"></figure>
 Over FY18-20, on average NZAI sold 11,092 cars each year at a price of NZ$6,845/vehicle to generate a revenue of NZ$76m. As per management estimates, NZAI had an 8% market share of all imported used vehicles sold in New Zealand, for 12 months ending 31 March 2020. Over FY18-20, overall revenue grew by 3.2%, gross profit by 7.86% and pro forma EBITDA by 21.09%. Although, NPAT was down 3.72% due to higher finance costs.
 NZAI plans to pay out 50-60% of NPAT as dividend each year. Based on our estimates of FY21 earnings and a 60% NPAT payout ratio, implies 4% cash dividend yield. Please note that this is for illustration purposes only and has not been calculated with any inputs from NZAI.
 In comparison to Turners Automotive, its closest peer, the shares will be at a substantial discount on EV/EBITDA basis, however, they will be at a slight premium in terms of p/e and will offer a lower dividend yield, based on our estimates. At the indicative listing price, the yield appears attractive in our view, with the potential growth of the financing business expected to provide some future upside.
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 177.05pt;">
(NZ '000)
</td>
<td style="width: 62.95pt;">
FY18
</td>
<td style="width: 62.95pt;">
FY19
</td>
<td style="width: 59.25pt;">
FY20
</td>
<td style="width: 59.25pt;">
6M20
</td>
<td style="width: 58.35pt;">
6M21
</td>
</tr>
<tr>
<td>
Number of vehicles sold
</td>
<td>
    10,919
</td>
<td>
    11,337
</td>
<td>
   11,020
</td>
<td>
     5,859
</td>
<td>
     3,919
</td>
</tr>
<tr>
<td>
Average revenue per vehicle
</td>
<td>
      6,745
</td>
<td>
      6,918
</td>
<td>
     6,871
</td>
<td>
     6,684
</td>
<td>
     7,741
</td>
</tr>
<tr>
<td>
Revenue
</td>
<td>
    73,652
</td>
<td>
    78,433
</td>
<td>
   76,012
</td>
<td>
   39,163
</td>
<td>
   30,418
</td>
</tr>
<tr>
<td>
Gross profit
</td>
<td>
    15,645
</td>
<td>
    14,886
</td>
<td>
   16,875
</td>
<td>
     8,349
</td>
<td>
     6,829
</td>
</tr>
<tr>
<td>
Pro forma EBITDA
</td>
<td>
      7,133
</td>
<td>
      5,943
</td>
<td>
     8,637
</td>
<td>
     4,393
</td>
<td>
     3,950
</td>
</tr>
<tr>
<td>
NPAT
</td>
<td>
      4,392
</td>
<td>
      3,386
</td>
<td>
     4,229
</td>
<td>
     1,884
</td>
<td>
     1,867
</td>
</tr>
<tr>
<td>
 
</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>
 
</td>
</tr>
<tr>
<td>
Dividend
</td>
<td>
      2,064
</td>
<td>
      4,256
</td>
<td>
        957
</td>
<td>
        532
</td>
<td>
     1,064
</td>
</tr>
<tr>
<td>
Total assets
</td>
<td>
    15,434
</td>
<td>
    18,889
</td>
<td>
   29,413
</td>
<td>
   27,459
</td>
<td>
   30,491
</td>
</tr>
<tr>
<td>
Cash and cash equivalent
</td>
<td>
      5,623
</td>
<td>
      5,024
</td>
<td>
     1,775
</td>
<td>
     5,868
</td>
<td>
     8,304
</td>
</tr>
<tr>
<td>
Total debt
</td>
<td>
      4,066
</td>
<td>
      8,000
</td>
<td>
     7,999
</td>
<td>
     7,439
</td>
<td>
     7,870
</td>
</tr>
<tr>
<td>
Total liabilities
</td>
<td>
    27,629
</td>
<td>
    31,998
</td>
<td>
   39,194
</td>
<td>
   39,250
</td>
<td>
   39,512
</td>
</tr>
<tr>
<td>
Pro forma total liabilities
</td>
<td>
      7,629
</td>
<td>
    11,998
</td>
<td>
   19,194
</td>
<td>
   19,250
</td>
<td>
   19,512
</td>
</tr>
<tr>
<td>
Net cash flows from operations
</td>
<td>
      2,653
</td>
<td>
         467
</td>
<td>
        (56)
</td>
<td>
     3,392
</td>
<td>
     8,577
</td>
</tr>
</tbody>
</table>

NZ Automotive Investments Limited (NZAI) aims to list on the New Zealand exchange via a direct listing on 25 February 2021.
NZAI is a used automotive business operating throughout New Zealand. NZAI’s business is split across two divisions: Automotive Retail and Vehicle Finance. The Automotive Retail division was founded in 2011 and it operates under the “2 Cheap Cars” brand. The vehicle finance division was founded in 2019 and operates under the “NZ Motor Finance” brand.

 Over FY18-20, on average NZAI sold 11,092 cars each year at a price of NZ$6,845/vehicle to generate a revenue of NZ$76m. As per management estimates, NZAI had an 8% market share of all imported used vehicles sold in New Zealand, for 12 months ending 31 March 2020. Over FY18-20, overall revenue grew by 3.2%, gross profit by 7.86% and pro forma EBITDA by 21.09%. Although, NPAT was down 3.72% due to higher finance costs.
 NZAI plans to pay out 50-60% of NPAT as dividend each year. Based on our estimates of FY21 earnings and a 60% NPAT payout ratio, implies 4% cash dividend yield. Please note that this is for illustration purposes only and has not been calculated with any inputs from NZAI.
 In comparison to Turners Automotive, its closest peer, the shares will be at a substantial discount on EV/EBITDA basis, however, they will be at a slight premium in terms of p/e and will offer a lower dividend yield, based on our estimates. At the indicative listing price, the yield appears attractive in our view, with the potential growth of the financing business expected to provide some future upside.




(NZ '000)


FY18


FY19


FY20


6M20


6M21




Number of vehicles sold


    10,919


    11,337


   11,020


     5,859


     3,919




Average revenue per vehicle


      6,745


      6,918


     6,871


     6,684


     7,741




Revenue


    73,652


    78,433


   76,012


   39,163


   30,418




Gross profit


    15,645


    14,886


   16,875


     8,349


     6,829




Pro forma EBITDA


      7,133


      5,943


     8,637


     4,393


     3,950




NPAT


      4,392


      3,386


     4,229


     1,884


     1,867




 






 




Dividend


      2,064


      4,256


        957


        532


     1,064




Total assets


    15,434


    18,889


   29,413


   27,459


   30,491




Cash and cash equivalent


      5,623


      5,024


     1,775


     5,868


     8,304




Total debt


      4,066


      8,000


     7,999


     7,439


     7,870




Total liabilities


    27,629


    31,998


   39,194


   39,250


   39,512




Pro forma total liabilities


      7,629


    11,998


   19,194


   19,250


   19,512




Net cash flows from operations


      2,653


         467


        (56)


     3,392


     8,577





NZ Automotive Investments Limited Direct Listing - One of the Largest Used Vehicles Dealerships

Australia

AP Eagers Limited sells new and used motor vehicles and distributes related parts and accessories.  The Company operates a wide range of vehicle franchises primarily in the Brisbane region and whose services include vehicle servicing and parts, financing, leasing and extended vehicle warranties.

Ap Eagers Ltd (APE AU)

NZ Automotive Investments Limited Direct Listing - One of the Largest Used Vehicles Dealerships

NZ Automotive Investments Limited (NZAI) aims to list on the New Zealand exchange via a direct listing on 25 February 2021. NZAI is a used...

Sumeet Singh