Redde Northgate Share Discussion Threads

[bearraider] 12/6/2008 16:47

must have missed that big share price fall in the last 9 minutes it seemed to go up to me!

Steve how come you have removed most of your old posts on NTG threads - got it wrong too many times? some of the replies to your posts thought you might have a grudge against NTG or maybe just a shorting attack again? did the surprise £12 takeover offer wipe out your short in 2005 or something?

[gohunk] 12/6/2008 16:43

steve, not gone short have you by chance ?

[queeny2] 12/6/2008 16:35

you mean contreras?

[queeny2] 12/6/2008 15:14

forgot to say thanks, steve.

[queeny2] 12/6/2008 15:13

presumably, even if they sell a decent percentage direct, and get more than at auction, which is what they say, the prices they get, while at a premium, will fall in line with auction prices more or less?

also how do i check spanish residuals, where they specifically warned in march?

[queeny2] 12/6/2008 15:10

Wednesday 4 June 2008

The decline in the used vehicle market continues with BCA reporting that the market for used light commercial vehicles is stalling.

"Despite fleet and lease van values rising, there are growing numbers of ex-lease short, medium and long-wheel-base vans available and we are seeing more unsold stock than earlier in the year," said Duncan Ward BCA's UK business development manager for commercial vehicles.

LCV nearly-new and part-exchange values have fallen as professional buyers and traders remain cautious.

Putting a positive spin on the situation, Mr Ward said: "This means there is a great opportunity for small and medium sized businesses to get a good deal at auction if they are looking to upgrade their commercial fleet."

[queeny2] 12/6/2008 14:40

steve - where can i get good data on white van auction prices?

[bearraider] 12/6/2008 12:57

Current Sp is in region of 465p very long term support - if it fails other support levels are not as strong till sub 400p

[bearraider] 12/6/2008 12:43

As I have just posted on TAN

Ford commercial production is flat out (no capacity cuts there) to be increased by 48,000 reason export to Russia and other newer markets. May take tightness out of new sales/residuals once on stream - coupled with recession? OR Ford may start exporting to USA to build up market for launch of US production of Transit/Connect so supply may remain tight for Ford Transit (over 40% NTG UK fleet is Ford - none in Spain)

Increased Div H1 15% expect same it is covered 3 times!

[queeny2] 12/6/2008 12:06

dividend intentions - if they are taking or considering any actions as above, I wonder what div increase we will get.

[queeny2] 12/6/2008 12:05

thanks - agree / understand all that. Glancing thru yr earlier posts, also agree NO hurry to buy this. I cannot see July results putting shares on an uptrend, might get bounce is all. Risk in July is warnings on any of the variables, and although i agree they can shrink/age fleet quickly, market would see the necessity for doing that as -ve imo, and would want to wait for next statement.

The debt of £865 can shrink by how much in a year if they age fleet, I reckon £100m roughly? That's not spending net £10k on 10,000 vehicles (£15k new - £5k residual) all numbers v approx obviously.

[bearraider] 12/6/2008 11:18

A few more variables to chuck in

Residuals normally are stable to a rise in a recession for vans even though new prices may fall if manaf need to increase discounts/incentives to maintain sales. This time neither may happen unless the recession is very deep and prolonged, because as stated before residuals are abnormally good and supply is tight. Due to capacity cut already? or diversion to elsewhere USA? (good prospects for more efficient European models?)or Russia/ eastern Europe etc.. If diversion is to say USA that market could actually grow in a downturn if fuel costs are driving it.

Growth in van rental as a % of need always grows in a recession - companies put off capital expenditure and even accelerates as the tide turns, the steadier times in the economy slacken the pace of growth as companies are more certain and lease/buy as the lowest cost.

NTG has only 2%-3% exposure to 'day rent' to the public but some of the trade business is also very short term. This does provide flexibility in keeping up utilisation rates by balancing sales and disposals. NTG can cut it's fleet by 5%in a MONTH just by not buying 6000 vehicles. Though this would cut profitability it would have the affect of drastic debt reduction, which could also be necessary if the whole credit world worsened. Though NTG seems to have a good flow of finance maturing at different times (big chunk of 3 year debt due 2010)at good fixed rates 4-6% (67% total debt) with a third variable (a third of this 12% total is also hedged).

If lots of other companies vans are sitting around rates could fall generally. past evidence suggests NTG will not do that it prefers to cut fleet growth and because of it's size this tends to force others to follow.

[queeny2] 12/6/2008 10:34

Thank you - interesting and valuable.

For such a simple in theory company I am finding it bloody complicated. I'm wiggling utilisation, hire rates, and residuals to see the effect, in essence trying to test the downside (debt covenants etc in worst case), and am then faced with (in that worst case) the fact that they will then slow new vehicle purchases and residual sales, effectively age the fleet, and I can't work out how that will flow through.

I also don't recall from previous economic slowdowns what happens to utilisation (also quite long hire contracts in NTG case) and then how quickly and savagely, or not, hire rates react to a percentage of the white van hire fleet overall sitting around doing nothing. I can see in theory it could be bad, but don't have the practical experience in the sector.

In a company this operationally and financially leveraged I want to test the bear case thoroughly - if I can't stand it up then it goes on the "buy" watch list.

thoughts from more of an industry perspective?

[bearraider] 10/6/2008 16:48

Gone up, very strong residuals UK this year as last(new vehicle market is very tight with supply - manafactures have diverted production to what or where I do not Know)in a downturn historically residuals are stable or go up not sure they will rise this time as they have been very strong for nearly a year but may stay stable at current rates even a fall would still leave NTG with a profit on factored residual.

NTG is growing it's direct private resales (20% of disposals in UK - higher margins) the rest go through two other wholly owned trade channels. NTG vans never go to auction in the UK. It gets above market residuals for all UK disposals.

Spain is a different problem, residuals has fallen both this year so far and last half of 2007. This is because NTG does not have the same disposal infrastructure in Spain and has to sell into the general disposal. The problem compounded by the double figure year on year growth in the fleet size. (NTG have talked about setting up an Export channel for some of the Spanish fleet)

[queeny2] 10/6/2008 16:15

bear - what's happened to white van residuals this year do you know?

[bearraider] 10/6/2008 12:34

Look at the very long term graph you have the initial build up from small company growing rapidly.

Then a period of years when it traded between 350p at the bottom and around 530p at the top as it digested other similar sized comp and took % shares in two Spanish comp.

Then the lump of growth of the last couple of years as it expanded quickly with cheap money into a booming economy (particularly in Spain) and with a rising market plus a takeover bid at £12 the share price went up to far A year ago £9 was probably fair to overpriced.

Now the market probably thinks they have borrowed too much money in euro's (more than the assets in Spain and Eire are worth) so with the £ slumping against the Euro debt grew by £80m in last half year which won't be offset by the growth in euro profits.

I reckon it may sink to 400p or even 350p at which point it will be at near real NAV and unlikely to go down much further as a financial group would probably then buy it if it did.

But one to watch results and update in July may help give more direction.

[gohunk] 10/6/2008 11:33

sorry i've bailed....can also see it reaching the 4 quid mark and its gonna hurt, i'll get back in if i can around the 4 mark pre july results...
was it iulia or someone who said one of his most respected traders has tipped this as one to watch to short....
safer on the side lines.
You decided get in levels yet bear ?