Sparks

Pinewood Technologies has signed a five-year contract with Global Auto Holdings (GAH) to implement the Pinewood Automotive Intelligence platform into all of its owned dealerships in the UK, North America and Scandinavia (155 franchise dealership locations). In the UK, GAH owns Lookers, the third largest dealership group, making this the largest UK brand that Pinewood supplies. One of the company’s recently stated goals was to sign up a top 20 UK auto retailer by the end of 2025; with this deal, Pinewood now works with six of the top 20. The rollout and revenues are expected to start in the UK by 2026. As part of this deal, Pinewood has issued warrants in respect of 6.1m shares (c 7% of outstanding shares) at a strike price of 330p, with vesting subject to the satisfactory installation of the Pinewood platform in each geography (UK 5%, North America 1% and Scandinavia 1%).

Separately, Pinewood announced it has successfully completed the rollout of its platform to all Lithia UK stores and it expects to report FY24 underlying PBT of £8.3m, 6% higher than consensus. It also highlighted that the implementation of the platform with recently signed large customers is likely to be weighted more to 2026 than 2025 to align with customer requirements.

The company has made good progress since it was spun out of Pendragon at the start of 2024. Trading on a P/E of 47.6x FY24e and 31.5x FY25e prior to this announcement, the new contract and the strong close to FY24 provide support for the valuation.