JLR wholesales up ~19% YoY…
…led by low base/market-level initiatives
* JLR’s wholesale volumes grew 19.4% YoY (-3.3% MoM) to 41.8k units (our estimate: ~43k) in Jul’19, whereas China JV volumes declined 2% YoY to 4k units. We note that growth was supported by a low base (22% decline in Jul’18) and market-level initiatives undertaken by the company.
* Jaguar volumes fell 1% YoY to 12.4k units (our estimate: 14k), whereas Land Rover volumes were up ~30.5% YoY to 22.6k units (our estimate: 29k units).
* JLR’s retail volumes grew ~5% YoY with an improvement seen across markets (barring flat growth in Europe), particularly in China (+40% YoY to 8.6k units).
* Jaguar’s retail volumes were up 3.6% YoY, led by higher sales in models like XE, XK/E-pace, others/F-types, whereas I-Pace reported ~1.1k units in sales.
* LR’s retail volumes increased 5.6% YoY, led by RR Sport and RR Evoque (~64% YoY to 6.4k units).
* Mr Felix Brautigam, Jaguar Land Rover Chief Commercial Officer said, “July saw good retail sales growth in the UK, where we continued to outperform the overall industry trend, and the US, with the highest July sales on record for Jaguar Land Rover. Results in China were significantly better than the previous year, thanks to our proactive work with the retailer network. Whilst the market is still unstable, we look forward to building long-term sales momentum in this important region. July marked the official launch of the new Range Rover Evoque in China, to very positive customer and media reviews. Electric I-PACE continues to drive sales for Jaguar. Demand for Land Rover is also encouraging. We are delighted by the customer reaction to the new Range Rover Evoque, a truly refined Range Rover in a compact SUV package. As sales of the Evoque grow from strength to strength, we expect to build on this performance when the very comprehensively refreshed Discovery Sport starts to make an impact. The combination of unparalleled versatility and even more premium features will make the renewed Discovery Sport the SUV of choice for many families”.
* A sustainable recovery in volumes in JLR (particularly in the profitable markets of China), along with the ongoing cost-cutting initiatives, is key to value-accretive growth and stock performance. This is particularly important due to the impending downcycle in the cash-cow India CV business in FY21.
* The stock trades at 12.1x/8x FY20/21 consol. EPS. Maintain Neutral with a TP of INR146 (Mar’21E SOTP-based).
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