Automotive retail group AP Eagers Ltd (ASX: APE) saw its shares gain 5.4% today to close at $6.24. And that's on a day when the S&P/ASX 100 (Index: ^AXTO) (ASX: XTO) managed a gain of just 0.1%.
AP Eagers announced today that it expects to see a record underlying net profit after tax of $106.2 million for the 2014 financial year, 22% higher than the $87.3 million recorded in 2013.
Statutory net profit, which includes one-off items and asset revaluations is expected to be $76.7 million, 20% higher than in 2013. While AP Eagers doesn't expect any material adjustments to asset fair values, statutory profit includes one-off business acquisition expenses.
The result comes despite sales of new cars falling by 1% in Australia in 2014 compared to 2013 and bodes well for AP Eagers' listed-competitor Automotive Group Holdings Ltd (ASX: AHE), as well as online classifieds site Carsales.Com Ltd (ASX: CRZ). Clearly, there's a strong market for second-hand vehicles.
Along with its 110+ dealership locations and 27 car brands, AP Eagers also owns $280 million of prime real estate – 70 acres in mostly high profile locations across Australia's east coast. The company also holds 19.9% of Automotive Holdings Group and a 7.5% stake in carsguide.com.au – a competitor to Carsales.Com.
With a track record of consistent earnings and steadily growing dividends (as you can see from the chart below), it's no wonder investors have clambered aboard AP Eagers for a test drive.
Source: AP Eagers presentation
Clearly, the company is targeting another high dividend when it officially announces its results later next month.
