Zeus Capital Head of Research Mike Allen caught up with DirectorsTalk to discuss Cambria Automobiles PLC (LON:CAMB)
Q1: Mike, I’d like to talk to you about Cambria Automobiles. They announced some pretty good preliminary results today, can you give us an overview of those results?
A1: Yes, of course. So strong results, they’ve delivered 38% growths in adjusted PBT which filtered down to the earnings line as well, that was 2% ahead of our expectations on both lines and in terms of the dividend as well, the dividend is in line with our expectations and that was 20% ahead year on year.
Q2: What do you think makes Cambria attractive?
A2: I think the main thing with Cambria is the return on equity at the moment, that’s currently in excess of 20% and that’s really testament to their capital of discipline that they’ve employed in the business from inception over the last ten years. This business started at just under £11 million share capital and it’s self-funded its growth to deliver £10.6 million of PBT this year so I think given the start-up capital I think that’s a very good outcome.
Q3: Finally then, what’s your medium-term view for Cambria Automobiles PLC?
A3: I think on a medium-term basis I see no reason why this can’t be a £1 billion revenue business and I think on that basis in normal mid cycle conditions that could generate earnings of shares of about 16p so I do see quite a lot of earnings upside over the medium term. I think as long as they keep the capital discipline that they’ve shown over the last decade then this should be a very comfortable medium-term investment.
