Looks cheap

The auto and the motorcycle sectors benefit from a significant rebound of their sales.
This is well reflected in the share price of the listed car dealers : AP Eager and Autosports, which had a significant rebound of their share price since the beginning of the year. However, MTO share price has been almost flat since the beginning of the year (slight increase if we include the interim dividend).
Looking at the past 5 years, it is a similar situation, with AP Eagers and Autosport now at new record high (or close to previous record high), while MTO is 50 % under its peak of the past 5 years.

This difference of valuation between the auto distributors and MTO (motorcycle distributor) is not explained by MTO's valuation which remains cheap looking at all the valuation metrics.
Even if we exclude the impact of Jobkeeper, MTO has a ROE of 18.8 % (based on H1 results, annualised), while it is only valued at a P/B of 1.15 x.

MTO's valuation mainly reflects the fact that market conditions are quite exceptional this year :
- strong increase of volumes for new motorcycles (+ 20 % for the market for H1 and then + 52 % for Q3, still for the market),
- significant price increase (around 10 %) both for new units and used motos for H1 21, due in particular to shortages,
- favorable fx.
In addition, MTO had a good cost control during H1 : + 6 % for operating costs vs + 23 % for sales.

However, today's valuation seems to reflect a conservative scenario where margins would have a significant decrease during the next 2 to 3 years.
It also looks cautious as it does not seem to reflect a significant improvement of their financial situation during H1 21, which is expected to continue during H2.