Recovering Car Sales Set to Drive Eager's Better-Than-Anticipated 2020

We lift our fair value estimate for shares in narrow-moat Eagers Automotive to AUD 9.50, from AUD 9.00 previously, following strong trading through 2020. The lift to our fair value estimate is due in equal parts to a lift in our forecast of near-term earnings and the time value of money. Eagers released full-year guidance for calendar 2020 of underlying operating profit before tax of AUD 195 to AUD 205 million, compared with AUD 100 million in the prior corresponding period, or PCP, reflecting the first full year of trading following the Automotive Holdings Group merger. We lift our calendar 2020 profit-before-tax forecast to the lower end of updated guidance, from AUD 112 million previously.