founded: 1971, ASX code: ADG, homepage: www.adtrans.com.au

Overview
Adtrans Group Limited, originally a South Australian company nowadays operates over 20 automotive retail businesses in its home state, 6 in Victoria and 1 in NSW. It employs about 920 people and proceeds with the sales of over 15,000 vehicles per year. The main brands in its franchise stable include such names as Ford, Toyota, Chrysler, Jeep, Iveco, Mercedes-Benz and more.

Analysis of June 2007 financial results:

• Market Cap: Depending on the daily stock price of this company the total market capitalization is around $110 million over 23 million shares on issue
• Shareholders Equity:: $56 million making the stock’s book value approx. $2.43 per share (7.7% growth on FY 2006)
• Earnings per share: $0.35 making the average EPS growth in last 3 years only about 3.7%
• Return on Equity: 14.3%, averaging around 15%pa in last 3 years
• Balance Sheet: Working capital of $23.6 million (ie. $1.03 per share) versus total debt of $94.4 million

GROWTH STOCK:

• Conservative forecast of average EPS growth in next 10 years: 8%
• Share price in 10 years time: about $6.70 (EPS in year 10 based on forecasted yearly EPS growth times average P/E)
• Total shareholders return in 10 years times: $9.95 (share price of $6.70 plus $3.25 of the 10 years worth of dividends if the current payout ratio of about 60% persists)
• Rate of Return in next 10 years based on the beginning of December 2007 price of $5.10 per share: 6.9%pa

Pros and cons:
+++ Not issuing new shares hence maximising the value for current shareholders
+++ High levels of top management shareholding participation (in excess of 26% of issues shares held by the company executives)
— Cyclical business where one year of good EPS growth often follows another year of EPS decline
— Rather large amounts of debt levels given by the big amounts of cash to operate in this industry

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This entry was posted on Thursday, December 6th, 2007 at 9:33 pm and is filed under Australian stock. You can follow any responses to this entry through the RSS feed. You can leave a response, or trackback from your own site.