Edison Issues Initiation on Marshall Motor Holdings (MMH)

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Edison Investment Research

11 May, 2017, 10:03 GMT

LONDON, May 11, 2017 /PRNewswire/ --

As Marshall Motor (MMH) celebrates the second anniversary of its flotation on AIM, it can reflect positively on the continuation of its strong growth record, which has driven it to rank seventh among UK automotive retailing groups. The strong brand coverage and excellent relationships with major manufacturers should continue to deliver growth opportunities, despite potentially tougher market conditions. Our fair value for MMH currently stands at 214p per share.

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MMH trades on an FY18e P/E ratio of 5.7x on our forecasts, 28% lower than the average for UK auto retailers (excluding Inchcape). We do not believe the discount is warranted by relative growth potential, which is supported by a progressive dividend policy. We believe an in line rating is more appropriate, which together with a potential unwinding of the sector's multiple contraction seen since the Brexit vote could drive a significant re-rating.

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