After going nowhere for most of the day, the Automotive Solutions Group Ltd (ASX: 4WD) share price suddenly rocketed higher in afternoon trade to make a new 52-week high.
At the time of writing, the aftermarket products provider's share price is up over 6% to $1.01.
The reason for today's gain is due to a positive market update released after lunch regarding the expansion of its Roo Systems and Alloy Motor Accessories dealer networks.
Queensland-based Roo Systems is a leading provider of diesel performance upgrade packages. According to the release it has secured a new three-year service contract with a major Queensland auto breakdown service provider that generates annual sales of over $1 billion per year.
Furthermore, the business has increased its dealer network by adding eight new dealers since its listing on the ASX late last year.
Alloy Motor Accessories is a manufacturer and supplier of Ute tray toolboxes, aluminium roof racks, and roof baskets. Pleasingly it has recently been approved as a supplier by three dealer networks and also the regional councils in Queensland.
What does this mean?
Management believes this expansion and the new contracts will support sales and earnings growth for the current financial year and beyond.
Whilst management hasn't upgraded its full-year guidance yet, I feel reasonably confident that the booming SUV market and today's news puts it in a strong position to smash expectations.
For the full-year management expects revenue to increase by 7% to $42.7 million and earnings before interest and tax to increase by 8.3% to $6.5 million.
With AP Eagers Ltd (ASX: APE), AMA Group Ltd (ASX: AMA), Bapcor Ltd (ASX: BAP), and Autosports Group Ltd (ASX: ASG), investors certainly have a lot of choice in the automotive sector. But I would put Automotive Solutions Group up there as one of the better options.
