Shares in fleet management and car financing company Eclipx Def Set (ASX: ECX) have climbed more than 20% above their listing price of $2.30 to trade at $2.77, in late afternoon trading.
The company raised $253 million from the sale of 110 million shares, and the jump is no real surprise given the attractive price offered. At $2.30, Eclipx was trading on a 2015 financial year P/E of just 11x and expected to pay a pro-forma, annualised dividend yield of between 4.8% and 5.6%.
Eclipx provides vehicle fleet leasing and management, consumer vehicle finance (including novated leases and chattel mortgages) and commercial equipment finance and leasing. The company says it has around 10% market share in fleet management, and competes against the likes of SG Fleet Group Ltd (ASX: SGF), McMillan Shakespeare Limited (ASX: MMS), Smartgroup Corporation Ltd (ASX: SIQ), LeasePlan, Toyota Financial Services, Custom Fleet (GE), ORIX and Summit.
McMillan trades on a trailing P/E ratio of 13.5x and is paying a 4.7% trailing dividend, while SG Fleet sports a 14.6x P/E ratio for the 2015 financial year, suggesting Eclipx was offered at a discounted price to ensure a successful IPO.
The biggest problem for all three companies, and indeed any companies providing goods and services subject to Fringe Benefits Tax (FBT) such as novated leases on employee cars, is the threat by the Labor Party to change the FBT rules.
You may recall back in 2013 when the government proposed changes to the FBT concessions. At the time, McMillan's shares fell 50% on the news over several days. The companies above all have varying exposure to potential changes to FBT, so Eclipx may well have a very small or close to zero exposure.
It's just one thing to keep in mind when considering an investment in the companies above, including Eclipx. Make sure you do your homework.
