- On Friday, Motus saw its share price climb as high as 34%, before closing at just 14% for the day.
- South Africa’s motor industry has been battered by Covid-19 and the lockdown, with a year to date sales decline of 32.5% for new vehicles.
- The share price jump followed Motus’ trading update that its dealership sales had fallen by 17% in the last 10 months and it anticipates its earnings to drop by up to 10%.
Vehicle importer, Motus ended the week on a high note with a surprise share price surge that signalled that the industry may not be out of the woods yet but is making a recovery.
On Friday, the exclusive importer and distributor of the Hyundai, Renault, Kia and Mitsubishi brands, saw its share price climb as high as 34%, before closing at just 14% for the day. South Africa’s motor industry has been battered by Covid-19 and the lockdown, with a year to date sales decline of 32.5% for new vehicles, according to vehicle industry representative, the National Association of Automobile Manufacturers of South Africa.
The share price jump followed Motus’ trading update earlier on Friday that its dealership sales had fallen by 17% in the last 10 months and it anticipated its earnings to drop by up to 10% for the year.
"If you look at the [national] car sales basket, people were expecting new car sales to fall on a sustained basis, by close to 70% or 80% and what actually transpired is that it wasn’t as bad as people anticipated," said Zaid Paruk, a portfolio manager and analyst at Aeon Investment Management.
In its trading update, Motus said South Africa’s new vehicle sales had been improving on an average of 35 400 per month, compared to 45 026 a month in 2019. The group said it expected total sales for the year to be between 355 000 to 375 000, increasing up to 440 000 for 2021.
Motus’s expectations are that its earnings would be down by as much as 10%, which Paruk said is better than expected.
AlphaWealth manager Keith McLachlan also said the news was unexpected, which was why the market had reacted positively and Motus’ trading update was "respectful" in the current environment. He explained that market expectations have been low, due to the beating a range of SA Inc stocks with small, medium and some large market capitalisations have taken over the years, especially this year.
However, McLachlan said, like many players in the automotive market, Motus’ recovery was incremental and its operational numbers continue to be in negative territory year-on-year.
Although the reaction to the group’s trading update sent the share price up more than 90% for the past seven months, following a drop that began when South Africa went into Level 5 lockdown at the end of March, the stock is still 38% down for the past year.