Vehicle Leasing & Salary Packaging

Despite the constraints created by a shortage of new cars, robust used car prices have ensured Eclipx can deliver substantial earnings growth

Notwithstanding the challenges posed by the pandemic, EclipX produced strong earnings growth in FY20 and enters FY21 as a more efficient business unit.

Vehicle leasing and salary packaging business Smartgroup has succumbed to earnings pressure as its add-on insurance underwriter makes changes to product terms.

A tighter focus on core leasing business has allowed EclipX Group to improve its balance sheet position while harnessing technology that is opening up untapped market opportunities.

EclipX Group is reverting to focus on its core fleet and novated leasing businesses, and interest in the company is only expected to grow.

Brokers say McMillan Shakespeare could outperform as car leasing and salary packaging businesses continue to grow.

Smartgroup Corp has proved resilient in the first half of 2019, recording growth in novated leasing and salary packaging despite a difficult macro environment.

Brokers welcome the prompt sale of two non-core businesses and the reduced risk of EclipX breaching its corporate debt covenants.

As expected, EclipX delivered a very weak first half, posting losses in four out five of its adjacent businesses. Yet brokers believe upside has emerged if the focus can return to the core operations.

FNArena’s Treasure Chest reports on money making ideas from stockbrokers and other experts. Risks for EclipX remain elevated, brokers agree, but has the market reaction presented an opportunity?