Here’s why National Tyre & Wheel (ASX:NTD) tanked over 21%

  • February 23, 2021 02:47 PM AEDT
  • Aayush
    Research Analyst Aayush
    31 Posts

    Aayush is a Research Analyst at Kalkine, with rich experience of over 3 years catering to capital markets. He has been a sell side equity advisor for two years and is currently dwelling deep into the equity research. He holds MBA in finance degree an...

Here’s why National Tyre & Wheel (ASX:NTD) tanked over 21%

Source: Shutterstock

Summary

  • National Tyre & Wheel reported NPAT of $9.83 million in 1H FY21.
  • 1H FY21 gross margin was higher due to favourable FX movements and less discounting.
  • NTD’s share price has tanked by 21.12 per cent in today’s session to A$0.84 (as at 1:48 PM AEDT).
Gold MTF non-AMP

On 23 February 2021, National Tyre & Wheel Limited (ASX:NTD) announced its earnings and business update for the half-year ended 31 December 2020. In 1H FY21, the Group posted revenue of $212 million, up by 19% on pcp. The revenue is on track to reach about $460 million in FY21. The gross margins are up to 28.4% from 27.0% in pcp with less discounting and favourable FX. Tyres4U margins have remained consistent with Group margin.

During the reported period, Operating EBITDA was reported at $15.4 million compared to $5.0 million in pcp. Over 50% of this improvement came from NTAW business units (ex Tyres4U). Tyres4U has maintained its 4Q20 EBITDA momentum. The Group had cash of $22.2 million as of 31 December 2020, down from $25.9 million on 30 June 2020, while net debt balance remained at $18.2 million at the end of 1H FY21.

Debt Facilities

As part of the Tyres4U acquisition, the Group obtained a new debt facility from Commonwealth Bank of Australia. The facility includes fixed elements for equipment finance, contingent liabilities and credit cards, and an amortising term loan relating to prior acquisitions.

The Group also obtained a working capital facility used to fund most of the cash consideration of the Tyres4U acquisition. This working capital facility will rise and fall with the Group’s cash flow, supplier invoices and inventory levels.

Read More: National Tyre & Wheel Announced Varied Contract

Synergies

In 1H FY21, NTAW continued to operate as a holding company, allowing each of its operating subsidiaries to carry on businesses that address particular market segments or involve different business models. While there has been some limited cross-selling between Tyres4U and other Group companies, the 1H FY21 result does not include any material revenue or cost synergies arising from the Tyres4U acquisition.

Image Source: Copyright © 2021 Kalkine Media Pty Ltd.

The Group has announced that it expects to save about $2.5 million per annum in run-rate occupancy costs in FY22-23 and deliver other run-rate revenue/cost synergies of $3-$5 million per annum in FY22.

Stock Performance

NTD’s share price has tanked by 21.12 per cent in today's session to A$0.84 (as at 1:48 PM AEDT). With today’s massive fall, the last three months return has also been cut down to negative 1.17 per cent. However, the one-year return stands at a healthy 110 per cent.

 

 


Disclaimer
The website https://kalkinemedia.com/au is a service of Kalkine Media Pty. Ltd. (Kalkine Media) A.C.N. 629 651 672. The principal purpose of the content on this website is to provide factual information only and does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) or engage in any investment activity under discussion. We are neither licensed nor qualified to provide investment advice through this platform. In providing you with the content on this website, we have not considered your objectives, financial situation or needs. You should make your own enquiries and obtain your own independent advice prior to making any financial decisions.
Some of the images that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed on this website unless stated otherwise. The images that may be used on this website are taken from various sources on the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image. The information provided on the website is in good faith, however Kalkine Media does not make any representation or warranty regarding the content, accuracy, or use of the content on the website.

 

   
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK