Marshall Motor Holdings - Continued strong performance in Q321

For Marshall Motor Holdings (MMH), the favourable mix of trading conditions for automotive retailers has continued through Q321 despite intensifying supply constraints as the global chip shortage disrupted production at car producers. Delivery lead times are extended, with strong margins for new cars and at unprecedented levels in the used car segment, leading to an excellent profit performance despite lower volumes. Management has again increased guidance for the current year profit to not less than £50m. While there is no certainty as to when trading conditions will normalise, we expect margins to moderate in FY22 as car supply improves. We have raised our FY21 EPS estimate by 25%, with no increase in FY22. A single-digit FY22e P/E multiple of just 9.1x does not look demanding as we expect markets to normalise and growth to resume in FY23.