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Diversified Royalty Corp T.DIV

Alternate Symbol(s):  BEVFF | T.DIV.DB.A

Diversified Royalty Corp. is a multi-royalty company. The Company is engaged in acquiring royalties from multi-location businesses and franchisors in North America. It owns Mr. Lube + Tires, AIR MILES, Sutton, Mr. Mikes, Nurse Next Door, Oxford Learning Centres, Stratus Building Solutions and BarBurrito trademarks. Mr. Lube + Tires is the quick lube service business in Canada, with locations across Canada. AIR MILES is a coalition loyalty program. Sutton is a residential real estate brokerage franchisor business in Canada. Mr. Mikes operates casual steakhouse restaurants in western Canadian communities. Nurse Next Door is a home care provider. Oxford Learning Centres is a franchisee supplemental education service. Stratus Building Solutions is a commercial cleaning service franchise company providing comprehensive environmentally friendly janitorial, building cleaning, and office cleaning services in the United States. BarBurrito is a quick-service Mexican restaurant food chain.


TSX:DIV - Post by User

Comment by Capharnaumon May 24, 2022 12:43am
102 Views
Post# 34702845

RE:RE:RE:Overlooked aspect of the Mr.Lube business

RE:RE:RE:Overlooked aspect of the Mr.Lube businessJust to provide additional context...

There are 23 million registered light weight vehicles in Canada with a CAGR around 2% (so 450k vehicles growth per year). New vehicle sales are about 1.6 million per year, which considering the vehicles growth mean that it takes around 20 years to replace the full fleet. In 2021, about 80k new vehicles were EVs in Canada.

It is projected that EV car sales will reach 20% of new vehicles sales in 2025, so that would mean around 350k new EV sales, which should still be smaller than the yearly vehicles growth. So, in 2025, there should be more gas vehicles registered in Canada than right now, even considering an increase to 350k new EV sales. Between now and 2025, that's at least three more years of growth for gas vehicles on the road.

EV sales will have to grow to more than 28% of new sales for the number of registered gas vehicles to shrink. However, compared to now, the gas vehicle registrations will only start to shrink when the new EV sales catch up for the growth until they get there (at 28%). I don't have a crystal ball to know when that will happen, but imo it's likely closer to 2030 than to 2025.

While I think that eventually Mr Lube will have to diversify their offering, the gas vehicle servicing market looks very healthy for at least 5+ years, despite increasing EV sales. They might have future plans to eventually capture the EV market, but in 2025 the EV market for servicing will still be small in terms of registered vehicles (around 4%).
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