Vertu Motors Share Discussion Threads

[essentialinvestor] 18/5/2016 13:14

LOOK my sector favourite atm, however unlike VTU they have a chunk of debt.

[ferries5] 18/5/2016 13:13

Though I do not like dilution, it is better than debt.
The money they are spending on the building and refurbishment of dealerships may be a concern for some. But if they want the dealerships they have no options,( Manufacturers dictate ) And of course the emission test, which is being blown out of all proportion by the Americans.

[cockerhoop] 18/5/2016 13:12

They raised £50m in May 2013 and £35m recently through placings, I'd be surprised if there was any further dilution for at least a couple of years.

[essentialinvestor] 18/5/2016 12:50

Yup, my take is the market wants to see a couple of years without
any more shares being issued.

[cockerhoop] 18/5/2016 12:48

EI,

Of the £35m they raised in March, so far they have spent £650,000 so they still have plenty of firepower. In fact RF alluded to several acquisitions in the near future in his recent BRR Media interview.

[essentialinvestor] 18/5/2016 12:34

Well with this share price placing more shares is not going to be very efficient,
so they will need to focus on growing what they have with smaller acquisitions
paid for out of existing facilities and cashflow.

[manrobert] 18/5/2016 12:31

yeah thanks for that but they keep falling.have to see if they are aware of institusional selling. rung company

[thomasthetank1] 18/5/2016 12:26

Read Edison's note on VERTU MOTORS PLC (VTU), out this morning, by visiting hxxps://www.research-tree.com/company/GB00B1GK4645

"Vertu’s results for the year to February 2016 fully live up to the positive pre-close trading statement. Revenue is up by 17% to £2.42bn and underlying pre-tax profits by 24.5% to £27.4m, slightly ahead of both our own and market estimates. Diluted and adjusted EPS is up by 25%, covering the dividend (up 24%) by almost five times. Trading conditions remained sound throughout the year, with increased volumes in most sectors. The expected increased pressure on vehicle gross margins did materialise, but management responded positively to the challenges..."

[manrobert] 18/5/2016 10:49

pretty good buying this morning,350000 in last 15 mts.

[nikesh] 17/5/2016 21:35

There is an institution selling. Only reason to explain constant decline while big PI buying.

[bennya] 17/5/2016 16:42

Very strange share price action considering the amount of buyers over the past week, any ideas?

[effortless cool] 16/5/2016 16:27

I have taken advantage of recent weakness to buy £20k worth. I would have bought more, but I am already overexposed to the sector through CAMB.

[manrobert] 16/5/2016 15:31

three large deals this morning down as buys but I wonder if they are delayed sells that have been holing price back.

[zoolook] 12/5/2016 12:20

Given that you can currently buy below the placing price in this instance you are not disadvantaged if you now buy as you would have to have done participating in the placing.

IIRC the previous placing was scarcely discounted.

[paleje] 12/5/2016 12:14

Simon Thompson has reco'd them today with 85-90p target. I can't print it, its subscriber but a lot of it echoes ferries5 article above.

[bigbertie] 12/5/2016 12:00

The company is clearly doing well, but the shares are worthless to small investors like me as gains in value are given away to selected institutions through placings! I don't mind them raising more cash if they can invest it profitably, but they should do it via a rights issue.

[ferries5] 12/5/2016 11:43

Vertu Motors stuck in reverse gear




By Harriet Mann | Wed, 11th May 2016 - 17:45

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car dealerships supply EU referendum Germany Mercedes-Benz Audi Jaguar
With its acquisitions team picking top-quality assets and record profit growth, Vertu Motors (VTU) should be in the fast lane. However, concerns about the EU referendum and sustainability of economic growth have wiped out 26% of the car dealer's value in the past five months, and the shares are now worth less than they listed at a decade ago.
Sales jumped 17% to £2.4 billion in the year to 29 February, but tighter control of costs means profit is growing faster and the pre-tax measure jumped 24% to a record £27.4 million, giving earnings per share (EPS) of 6.06p.

Operating inflow was up 150% at £65.8 million thanks to lots more reclaimed VAT. Vertu ended the period with £23.1 million of net cash, up by nearly half and supporting a 24% jump in the dividend to 1.3p.

Vertu's business model revolves around acquisitive growth: Vertu spent around £25 million on 16 dealerships last year. Expanding its premium business, Audi, Mercedes-Benz and Jaguar dealerships were added to its portfolio, although it still has a strong foothold in the less expensive brands like Ford, Hyundai and Honda.

With the UK car retail sector still heavily fragmented, there are lots of opportunities for Vertu to spend the £35 million it raised in March's share placing at 62.5p - one buy is in the bag, expect some news in the next couple of weeks.

graph 1

No flash in the pan

Growth at the aftersales business - including car service and MOT - has accelerated, with the number of customers paying each month rocketing from 9,000 five years ago to 90,000 today. As retention has grown from 20% to 45%, it generates a 77% margin. Accounting for just 7.8% of revenue at £189 million, it generated 39% of gross profit at £103 million.

"This isn't just a flash in the pan, this growth has been like this for four or five years," chief executive Robert Forrester explained to Interactive Investor Wednesday. “That provides us with great resilience, because that growth in aftersales will continue - it's baked in, basically.”

Used cars is the second most profitable part of the group, generating nearly 32% of gross profit, and while new car sales bring in the highest proportion of revenue at £1.4 billion, £76.9 million of profit is just 29.2% of the group total.

A new marketing drive focusing on TV rather than print is also paying off. Although the group spent £2 million more on advertising than last year, it made an extra £3.8 million on used cars, a good chunk of which was made in the second half: "we did well", qualifies the boss.

Liberum has pencilled in sales growth to £2.7 billion in 2017, with adjusted pre-tax profit leaping to £31 million, both up 12%. The shares are still trading below their 60p IPO price and Liberum reckons EPS of 8p is possible. That would put the shares on a price/earnings (PE) multiple of under 8 times, a 20% discount to its peers. Cheap, then.

Non-executive director Ken Lever certainly thinks so. He wasted no time in picking up £25,000 worth of Vertu shares at 61.23p a pop. With another record year under its belt and with promising start to the new year, Vertu is proving that it can deliver. So why did the shares fall as much as 4% Wednesday?

Impact of Brexit

Acknowledging the uncertainty surrounding next month's EU referendum, Vertu stays tight-lipped over any potential impact a 'Leave' decision would have on the business. Clearly, the vote is weighing on investor’s minds, though.

"I think it's a combination of [Brexit] uncertainty and the fact that the industry has come so far that creates nervousness with investors," Zeus Capital analyst Mike Allen told us. "Some investors like it, they can see the business delivering and supported, but there are investors out there that are nervous about the cyclical nature of the market."

While aftersales are a good defensive play to guarantee customers return in two or three years, the negative impact leaving the EU could have on currency could leave the car market in tatters.

If sterling plunged against the euro, European manufacturers would be deterred from selling stock in the UK market as it wouldn't be as profitable. On the other hand, a vote to 'remain' could cause the pound to rocket, which may lead to a flood of stock on the market due to its high profitability.

Still, if the UK does turn its back on the continent, the hundreds of thousands of cars German manufacturers ship to the UK each year will not dry up overnight. Allen reckons trade agreements would be signed pretty quickly, too.

"I don't think it would be good for the industry but that doesn't mean that the 700,000 German cars alone that come to the UK would turn to zero," he adds.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
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[ferries5] 12/5/2016 11:37

Also article on 3iii about vtu , not sure if it will let me post link.

[...] No

[eggbaconandbubble] 11/5/2016 16:41

Well, He's down about £1600 this am!

[master rsi] 11/5/2016 15:46

Non-executive Director Share Purchase

Ken Lever bought 40,800 the Dealing took place on 11 May 2016 at a price of 61.23p per Ordinary Share

[eggbaconandbubble] 11/5/2016 15:34

looking at the last few years figures and current ratios etc. This kind of performance would have Jim Slater spinning in his grave!

[thomasthetank1] 11/5/2016 14:10

Read Panmure Gordon & Co's note on VERTU MOTORS PLC (VTU), out this morning, by visiting hxxps://www.research-tree.com/company/GB00B1GK4645

"3% PBT beat against our forecasts: Sales / EBITDA of £2423m / £27.4m (we expected £2,405.4m / £26.7m). Net cash good at £23m (46% up on 2015) although management are careful to highlight that this 2x conversion is not normal and guide that “some of these amounts may reverse in future periods as vehicle flows from Manufacturer partners' evolve”. Dividend up c.24% at 1.3p..."

[eggbaconandbubble] 11/5/2016 13:48

Just like Cambria yesterday, a director has put his hand in his bought a round!

[jamesjjj] 11/5/2016 13:16

Excellent results posted by Vertu, possibly being held back by the upcoming EU Referendum?

[cockerhoop] 11/5/2016 12:47

The acceleration of used car sales in the H2 after modifying the marketing at Bristol St and Macklin should be noted and provide a excellent H1 2017 in Used Sales.