"Sales of 4WDs again grew strongly in October, up 26% on pcp. The 4X4 pickup segment (the category ARP is most exposed to) also posted particularly strong growth, up 33% on the pcp. Over the past 3 months sales of 4WDs were up 22%, while sales of 4x4 pickup trucks were up by 35%.
Vehicle production has returned to normal after the Thai floods and the Japanese earthquakes, but the company will continue to cycle weak comps until April 2013 (Oct Thai sales +34%).
The strength in 4WD sales in 2012 has also been driven by vehicle mix shifts with 4WD sales accounting for 43% of all vehicle sales in the ten months to October, compared to 39% in the pcp.
From a sensitivity perspective we note that half of ARP's sales are fitted to light commercial vehicles with a little more than half these sales estimated to originate from the purchase of new vehicles."
Source: Goldman Sachs Equity Research
ARP Price at posting:
$10.10 Sentiment: Buy Disclosure: Held
