Mercer actuary David Knox says the data used to determine the old age dependency ratio is “totally out of date” and overstates the severity of the problem.
From their inception, SMSFs have always attracted more than their fair share of criticism. Now it’s an ageing membership that’s being used to restrict their numbers.
Road to recovery
If any part of the economy is experiencing a sharp, ‘V-shaped’ recovery, it is car use. A number of ASX-listed companies stand to benefit from widespread avoidance of public transport.
Macquarie Securities has ‘outperform’ ratings on toll road operators Transurban Group and Atlas Arteria, online automotive classifieds business carsales.com and auto parts and accessories supplier Bapcor.
Macquarie says: “As Australians emerge from hibernation they are getting in their cars and driving, and avoiding public transport. Expect to see more road trips too, not just due to restrictions, but because people may also want to avoid planes.
“A change in car use behaviour could be a tailwind for car sales. There is no recovery in official data yet but Google searches for new and used cars have been rising rapidly in recent weeks and this could signal material pent-up demand for new and used car dealers.”
Macquarie’s analysis points to China, where higher road use has continued several months after restrictions were eased. It says a similar trend is emerging here, with spending on tolls and
Macquarie’s target price for Transurban is $15.17 a share – 6.2 per cent above the current price of around $14.30. The stock hit a peak of $16.37 in mid-February before falling to a low of $10.04 on March 19.
The target price for Atlas Arteria is $7.26 a share – 11 per cent above the current price of around $6.54. The stock hit a peak of $8.50 in mid-February before falling to a low of $4.33 on March 23.
The target price for carsales.com is $15.30 a share, which is actually above the current price of around $16.04. The stock hit a peak of $19.09 in mid-February before falling to a low of $10.47 on March 23.
The target price for Bapcor is $5.40 a share, which is above the current price of around $5.84. The stock hit a peak of $7.11 in mid-February before falling to a low of $3.15 on March 25.
Bapcor and carsales.com are fully priced, based on the current levels, but may provide buying opportunities on any future dips.
Macquarie says: “Toll road operators are so far the only ASX companies to quantify the improvement in sales trends since shutdowns eased.”
It says the trend observed in China has been repeated in several countries and Australia appears to be no different.
Transurban’s weekly traffic declines were at their worst in the first half of April, down between 51 and 65 per cent across Australia. The rate of decline has slowed considerably since then and the company has reported that “high traffic has rebounded faster than public transport, suggesting that social distancing is encouraging more people to commute using their cars.
Part of the investment case for carsales.com is that people who previously relied on public transport may need to buy a car. The company waived all advertising charges for April and offered a 50 per cent discount in May.
The company has reported that site inventory rose from around 210,000 vehicles to $230,000 in May, while buyer traffic has been consistent.
The case for Bapcor includes the likelihood that a shift to more use of private vehicles will see sales growth for after-market auto services. The easing of the drought may also be a help in this respect.
