CAR Group Ltd

CAR: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$89.00	Rpyft	Rcdbfbrg

Carsales.com Sensibly Sells Problematic Stratton Investment; Fair Value Maintained at AUD 14.50

Jun 13, 2019

We are pleased, but not particularly surprised, that narrow-moat Carsales.com has decided to sell its 50.1% shareholding in Stratton Finance. The company bought its Stratton shareholding in 2014 for AUD 60 million but the business has faced several challenges recently; including regulatory change, competition, and weak new cars sales caused by falling real estate prices and the associated wealth effect. The Stratton investment was impaired last December to about AUD 12 million, an immaterial value relative to Carsales.com’s market capitalisation of AUD 3.4 billion, and we expect Stratton to comprise less than 1% of group EBITDA in fiscal 2019.

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