SUL posted record annual revenue of $4.1bn and beat full-year profit expectations in August, after sales improved through the second half. Importantly, recent trading activity highlighted improving sales momentum into 1H26 for the key Supercheap Auto business. Similar to HVN, post-result, the stocks’ PT was raised in the region of 20-40%, arguably a bit late after the stock had already popped. The business is generating healthy free cash flow with room for further special dividends, although the company played down the prospect.
- SUL announced a 30c special dividend in addition to its 34c dividend, both fully franked and paid next week.
Same-store sales rose +4.5% in the FY, up +2.6% on a same-store basis. Higher theft rates had eaten into gross margins, particularly at Rebel, leaving the business with an easier fix than no foot traffic. We believe SUL is well-positioned with strong momentum into FY26, helped by its brand strength and assuming the economy doesn’t soften too much, the stock looks good. Although, like HVN, it’s also rich from a valuation perspective, it should be well supported by its healthy dividend yield as the RBA cash rate heads down towards 3%.
- We remain bullish on SUL, but it feels tired above $18.50 in the short term: MM owns SUL in the Active Growth and Income Portfolios.
MM is long and bullish SUL
Add To Hit List
