Smartgroup Corporation Ltd (ASX: SIQ) shares are up over 3% after a positive update.
Smartgroup’s business update
The company is presenting at the Morgans Queensland conference and gave an update about its 2020 third quarter performance.
It said that its performance was stable. It had 355,600 packages, up from 355,500 at June 2020. It had a 67,250 novated lease car park, compared to 67,500 at June 2020.
Smartgroup had 24,700 fleet vehicles under management, up from 24,500 at June 2020.
The company said that its business operations have now returned to normal. The Adelaide and Perth offices have completed their return, with Brisbane to follow in the coming weeks. But Smartgroup said flexible working arrangements for teams are in place and client site visitations continue to increase.
There has been continued progress towards packaging simplification and a technology systems consolidation.
It also announced a revised insurance supply agreement has been executed.
In terms of novated leases, the company has seen volume 11% lower, broadly in line with Australian private new vehicle sales, with Victorian third quarter volumes down 22%. The national novated lead volume was down 25% but it has a higher conversion rate.
The yield is lower with lower insurance pricing effective from 1 July 2020. There has been a moderate shift to new leases compared to refinancing in the third quarter, but it’s still unfavourable compared to historical proportions.
Summary
It’s good to see the company is largely stable, but there probably needs to be a national economic recovery before the company sees a return of performance. I don’t know enough about the company to know about its growth prospects, but I’d rather buy other ASX growth shares like Pushpay Holdings Ltd (ASX: PPH) which are growing strongly.
