SIQ -6.55%: Reported 1H26 results yesterday that were strong, but not strong enough given the strength in the share price, and we’ve seen universal broker downgrades since.
- 1H26 Revenue up 13% to $179.5m vs $177m expected
- Earnings (EBITDA) up 16% to $73.8m vs $72.75m expected
- Net profit (NPATA) up 11% to $42.4m, inline with expectations
- Interim dividend to 21.5cps.
Operationally, momentum remains strong. Active salary packaging customers increased 7% to 518,000, novated leases under management rose 15% to 91,600 and settlements increased 17% to record levels. New vehicle orders were up 34%, while the revenue pipeline increased to $22.5m.
EV adoption remains a major tailwind, with battery electric vehicles accounting for 68% of new novated lease orders during the half. Importantly, current enquiry levels remain ahead of the same period last year across salary packaging, novated leasing and fleet, although management cautioned against simply extrapolating the very strong first-half growth rates which is one of the reasons why the stock has fallen – current consensus assumed the 2H would be as strong as the 1H.
SIQ is continuing to invest heavily in technology and automation through 2026, with management still targeting an EBITDA margin in the mid-40s during 2027. The balance sheet remains strong, with just $35.4m of net debt, while the sale of most of its self-funded fleet book should further reduce capital intensity.
MM view: We thought this was a good result, although expectations were clearly high heading into it. The core business continues to perform well, EV adoption remains supportive and there is a credible pathway to stronger margins as technology investment starts to deliver operating leverage. The sell-off is more about the market’s expectations being too high.
MM will get interested in SIQ again ~$10
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