FleetPartners Recap

Last week we looked FleetPartners, FleetPartners is a leading provider of fleet leasing and management services, operating across Australia and New Zealand. FleetPartners manages over 88,000 vehicles and offers a comprehensive range of services including the acquisition, commissioning, and management of company vehicles, as well as providing funds access for businesses of all sizes.

Their performance through Covid saw a drop in Revenue due to constrained supply of vehicles however they were able to capture a great margin on vehicles sold to offset this constraint.

Current Market Cap

Fleetpartners currently has a market cap of $853m, with the share price increasing from $2.73 three months ago to $3.38 today, a 23.8% uplift, with half of that occurring in the past month. This is partly due to the share buyback by Fleetpartners but primarily driven by the news of a potential acquisition.

With an Underlying Profit After Tax (UNPAT) of $81m it is currently trading at a 10.5x multiple.

Comparable Transactions

There haven’t been many public transactions for fleet leasing companies within Australia in recent times. Usually to work around the lack of recent transactions you would look at similar industries with comparable trading multiples or even look to the US market for comparable transactions.

However, without digging too deeply, we cal look at SG Fleets acquisition of LeasePlan Australia in September 2021. The acquisition was made for a reported $387m in cash & scrip, with LeasePlan’s latest results showing an UNPAT of $27m. This multiple of 14.3x would give Fleetpartners an implied valuation of $1,158m.

Whilst it has been sometime since the LeasePlan transaction and therefore this multiple should be taken with a grain of salt, it isn’t unusual for a 20% - 30% premium to be added to the current market cap, which would bring FleetPartners much closer to the implied valuation.

Next Week: Investment Thesis