Analysis of Automotive Holding Group Limited based on Fundamental Parameters

The report analyzes Automotive Holding Group Limited based on fundamental parameters considering the current annual report and annual report of past three years. The report concludes that the company is not suitable for investment as there is a downfall in the results on a year on year basis.

Contents
Executive Summary...............................................................................................................................2
INTRODUCTION.....................................................................................................................................3
Macroeconomic Factors:.......................................................................................................................3
Competitors & Industry.........................................................................................................................3
Analysis..................................................................................................................................................4
Competitor Margin Analysis..................................................................................................................4
Conclusion.............................................................................................................................................5
RESOURCES B:.................................................................................................................................5

Executive Summary
The report is intend to analyse a company listed on Australian Stock Exchange i.e
Automotive Holding Limited based on fundamental parameter considering the current annual
report and annual report of past three years. The tool used for analyzing is the common size
financial statement and ratio analysis.
Post analyzing the company on various parameter including market share, profitability,
liquidity, non-financial parameters is that the company is not suitable for investment as there
is downfall in the results on year on year basis
INTRODUCTION
Automotive Holding Groups Limited (AHGL), is a holding company of various business.
The company is engaged in diversified business. AHGL is an Australasia based company.
The company majorly deals in automotive retailing.
The other area of focus of the company includes (a) refrigeration and logistic, automotive
retailing and other ancillary activities in relation to logistics. The company has near about
190 franchises of motor vehicles which are spread over 110 different dealership locations
with business in both Australia and New Zealand. (Reuters.com, 2019)
Macroeconomic Factors:
In terms of Trade Economics report, Australian economy is performing well and annual
growth rate of Gross Domestic Product has been estimated at 2.3% along with the Gross
Domestic Product per capita of AUD 55,925.93. (Knoema, 2018) Thus, the same is a good
sign for the industry.
Competitors & Industry
The latest report published by Aca Research on January, 2018 shows that the automotive
industry has undergone a decline on year on year mainly due to reduction in demand and
introduction of new legislation by Australian Government. In addition to above, demand for
Australian made vehicle have shown a decline of 2% of local sales. (Northcentral University,
2019) The details of the major competitors of the company has been depicted here-in-below:.
Sl.
No. Particular Revenue % of Market
share
1 Motor Cycle Holdings Limited 299.52 2.09%
2 Cash Converters International
Unlimited 260.35 1.81%
3 Nick Scali Limited 250.77 1.75%
4 Automotive Holding Group Limited 6470 45.09%
5 Lovisa Holding Limited 217.01 1.51%
6 AP Eagers Limited 4120 28.71%
7 Super Retail Group Limited 2570 17.91%
8 Viva Energy Reit Limited 160.93 1.12%

Sl.
No. Particular Revenue % of Market
share
Total 14348.58
(The Financial Times, 2019)
Analysis
For the purpose of anlaysing, the financial strength of the company various tools have been
used encompassing the profitability, liquidity, leverage and efficiency ratio has been
computed. A brief snapshot of the same has been presented here-in-below:
(a) On the basis of profitability analysis, it has been deciphered that the company has not
been performing well on the profitability front on year on year basis and the margin has
seen a decline compared to previous years. The ratio that has been computed to depict the
same includes Gross Profit Margin, Net Profit Margin etc. (For detailed Computation
Refer Excel). In addition, lower profitability discourage investment.
(b)On the basis of liquidity analysis, it has been deciphered that the company current ratio
and liquid ratio are below the ideal requirement and shall not be sufficient to meet the
short term liabilities of the company. The ideal current ratio is 2:1 and liquid ratio is 1:1.
The low ratio is not good from investment point of view (For detailed Computation Refer
Excel);
(c)On the basis of leverage analysis, it has been deciphered that the company is not debt
laden and the ratio is quite low much below the standard of 2:1 which is a positive signal
(For detailed Computation Refer Excel);
(d)On the basis of efficiency analysis, it has been deciphered that the company efficiency of
converting cash back to cash through cash conversion cycle has shown poor efficiency on
year on year basis which is not a good sign for investment(For detailed Computation Refer
Excel).
Competitor Margin Analysis
The margin earned by competitors during the period has been presented here-in-below:
Sl. No Particular Revenue Profit Margin (%)
1 Motor Cycle Holdings Limited 299.52 9.10 3.04%
2
Cash Converters International
Unlimited 260.35 22.50 8.64%
3 Nick Scali Limited 250.77 40.98 16.34%
4 Automotive Holding Group Limited 6470 32.64 0.50%
5 Lovisa Holding Limited 217.01 35.95 16.57%
6 AP Eagers Limited 4120 100.63 2.44%
7 Super Retail Group Limited 2570 128.30 4.99%

8 Viva Energy Reit Limited 160.93 18.70 11.62%
Total 14348.58
On perusal of the above table, it may be seen that company is performing poorly compared to
competitor.
Conclusion
Thus, on the basis of above computation investment in Automotive Holding Group Limited is
discouraged as company has shown a downtrend on year on year basis and accordingly the
investor shall not go long on this company unless any change in fundamentals or any boom is
seen in the market.
RESOURCES B:
 Automotive Holding Group Limited is the largest automotive
retailing sector and largest logistic sector. It has over 182
automotive franchisee at 113 different locations. Automotive
Holding Group Limited also has operation of five easyauto 123 fixed
price used car warehouses. The main geographic location in which
Automotive Holding Group Limited operates are Australia and New
Zealand. (Irving, 2018)
 The automotive industry has undergone a decline on year on year
mainly due to reduction in demand and introduction of new
legislation by Australian Government. In addition to above, demand
for Australian made vehicle have shown a decline of 2% of local
sales. (Irving, 2018)
 The latest report published by Aca Research on January, 2018 shows
that the automotive industry has undergone a decline on year on
year mainly due to reduction in demand and introduction of new
legislation by Australian Government. In addition to above, demand
for Australian made vehicle have shown a decline of 2% of local
sales. The list of few details of competition are here in below:
Sl.
No
.
Particular Revenu
e
% of Market
share
1 Motor Cycle Holdings Limited 299.52 2.09%
2 Cash Converters International
Unlimited 260.35 1.81%
3 Nick Scali Limited 250.77 1.75%

Sl.
No
.
Particular Revenu
e
% of Market
share
4 Automotive Holding Group Limited 6470 45.09%
5 Lovisa Holding Limited 217.01 1.51%
6 AP Eagers Limited 4120 28.71%
7 Super Retail Group Limited 2570 17.91%
8 Viva Energy Reit Limited 160.93 1.12%
Total 14348.
58
 The main key strategy of the company is to ensure timely
deliveriness and proper satisfaction of the customer in order to
ensure the company growth and the entity reaches to a new peak of
success.To prosper in this type of business highly talented and skill
set of employees are required.
 The current market potential of the company is very strong and the
strong potential in the global market foster growth of the economy.
 The main strength of the entitys business is its market
strength,scale of operaion,relationship with customer,trust,process
of operations,system and facilities provided
 The fixed remuneration of the director resulted in an average
increase in year 2018 comparison to year 2017 and the total
remuneration of the company stands at $5.77 million compared to
$5.29 million in financial year 2017.
 There is hardly any difference in wages as compared to the
competitors business if both competitors office and plant is at the
same prime locations ,the difference hardly matters and the wages
of the wage earner is almost same.
 The current management structure and ownership structure are as
below:
 John McConnell
 David Griffiths
 Howard Critchley
 Greg Duncan
 Giovanni (John) Groppoli
 Robert McEniry

 Jane McKellar
 Andrea Hall
Others:
 Philip Mirams
 Adam Irving
 David Rowland
 Gus Kininmont
 Eugene Kavanagh
 Martin Wandmaker
 Stephen Cleary
 Paul Morris
 The strength of the entity’s management team and the benefit to
the entity are here in below:
 The company has major market in warehousing and
distribution of refrigerated products.
 The company has a strong relationship with its producer and
consumer
 The company also comply with chain of responsibility,road
safety and legislative requirement.
 The remuneration trend from last year to this year for the highest
earner executive director are here in below:

 There are non wages related benefit provided by Automotive
Holding Group Limited is to reward the employee on the basis of
performance and competition and results delivered. The reward is
awarded on the basis of achievement of objective of the company
and timely delivery of the company assignment.
Bibliography
Irving, A., 2018. Annual Report 2018. [Online]
Available at: http://www.openbriefing.com/AsxDownload.aspx?pdfUrl=Report%2FComNews
%2F20180928%2F02027646.pdf
[Accessed 9 February 2019].
Knoema, 2018. https://knoema.com/mzpmmfd/australia-gdp-growth-forecast-2018-2020-and-up-
to-2060-data-and-charts. [Online]
Available at: https://knoema.com/mzpmmfd/australia-gdp-growth-forecast-2018-2020-and-up-to-
2060-data-and-charts
[Accessed 9 February 2019].

Northcentral University, 2019. NCU. [Online]
Available at: http://site.ebrary.com.proxy1.ncu.edu/lib/ncent/detail.action?docID=10160618
[Accessed 9 February 2019].
Reuters.com, 2019. Automotive Holdings Group Ltd (AHG.AX). [Online]
Available at: https://www.reuters.com/finance/stocks/company-profile/AHG.AX
[Accessed 9 February 2019].
The Financial Times, 2019. Automotive Holdings Group Ltd. [Online]
Available at: https://markets.ft.com/data/equities/tearsheet/profile?s=AHG:ASX
[Accessed 9 February 2019].