Caffyns Share Discussion Threads

[clemo69] 24/1/2022 19:43

£58,450 trade reported after closing. I think it's a buy as the price was 5.75. Someone has a fair bit of confidence.....

[spob] 17/1/2022 08:21

spread doesn't really concern me to be honest

just keep buying the dips and hold until someone buys me out

or value is more than fully reflected in the share price

[small cap value investor] 14/1/2022 16:53

I have held this stock for many years
Disappointed when the Dividend was suspended
Just received a nice Dividend and the spread is now £5.62 /£5.80
Best I have seen in a long time

[netcurtains] 12/1/2022 13:45

...but alas spread way too big ....

[netcurtains] 12/1/2022 10:29

I agree. Low PE, gives a dividend and has a full FTSE listing.
Thanks

[spob] 31/12/2021 19:30

UK car forecourts benefit as second-hand market surges


UK dealers’ profit margins and shares soar as shortage of new models boosts used vehicle prices

UK car dealers have all benefited because of the global supply chain and chip crises as a shortage of new models diverts consumer spending to used vehicles


Peter Campbell

FT


Back in March, the outlook for Britain’s car dealers was bleak.

But in the space of a few months, the car forecourt has turned into a gold mine as demand for second-hand vehicles has pushed up prices and restored the health of a sector that had been battered by the pandemic.

Big listed groups Vertu, Pendragon, Lookers and Marshall Motors have all benefited from profit upgrades and surging shares on the back of a flood of orders for second-hand cars.

“Pretty well every player in the sector has seen an abnormal level of profitability and therefore cash generation,” said Robert Forrester, chief executive of Vertu.

The profitability boost is mainly down to the shortage of new cars because of supply chain bottlenecks and the global chip crisis, which have diverted consumer spending to used vehicles and forced up prices.

Savage cost cuts have helped profit margins, too, with tens of thousands of jobs cut across the sector in the past two years.

For Vertu, the combination of rising prices and falling costs led to its fourth profits upgrade of the year, announced in December.

It now expects earnings of “no less than £70m” compared with a modest forecast of £24m in May and a decision not to offer guidance in March because the market’s outlook was so uncertain.

Pendragon also raised profit forecasts by £10m in October to £70m, then by another £10m to £80m only weeks later.

Shares have enjoyed a strong run as well. The stock of Lookers, Marshall Motors and Vertu have tripled since July 2020, while Pendragon’s has doubled.

“You had this perfect storm of pent-up demand and restricted supply that has forced up new [and second-hand] car values,” said Mark Raban, chief executive of Lookers.

However, new car values have been artificially capped as UK laws mean forecourts, unlike those in the US, cannot charge more for a new model than the manufacturer’s recommended selling price.

This has resulted in a narrowing gap between second-hand car and new vehicle prices, with the value of some used models even overtaking those of new ones — an “unprecedented” situation, say industry executives.

Pendragon chief executive Bill Berman said prices were rising so fast at one point that used-car values were surging while the vehicles stood on the forecourt.

“We had a situation where we bought [a car] in July, and sold the car in September, and the price had gone up by 10 per cent. That just never happens.”

On Auto Trader’s site, a quarter of nearly-new cars, classed as less than a year old, are now on sale for more than the new models, the company said. Almost half the used cars are within 5 per cent of the new sale price.

“It’s a seller’s market,” said Ian Plummer, commercial director at the company. “It’s a fundamental question of supply and demand.”

The group found average prices on used cars had increased by £3,400 between May and November.

Costs have been pared back steeply, too, with big job cuts and fewer cars on the lots. Before the shortages, Lookers had about 12,000 second-hand cars scattered across its sites. Today the figure is closer to 8,000.

“We all learned a huge amount through this period — keeping our inventory down is the best thing we can do to keep costs down,” said Lookers chief Raban.

In addition, dealers are offering fewer discounts and bargains, meaning higher margins, while several operators chose not to repay government furlough money for staff laid off while showrooms were closed last year.

The question now is how long will the topsy turvy conditions last.

Some think it may take years for supply and demand to rebalance, despite the slowing of price rises in the past month.

“If you look back at the recession, the market took three to four years to normalise again,” said Forrester at Vertu.

“We anticipate tight used car supply certainly for the next six months, but it could well be three to four years before we return to normal. There’s just a raft of new cars that are now never going to be made.”

Many dealers also rely on a steady stream of returning cars from personal leases, company cars or rental groups to bolster their second-hand fleets.

But the dearth of new models over the past 18 months means the stream will dry to a trickle over the next three years, putting further pressure on used prices.

“You can’t make a used car,” said Plummer at Auto Trader. “Today’s fallow new car market becomes tomorrow’s fallow used car market.”

Another key question is whether dealers can stick with lower stock levels and more disciplined pricing with fewer bargains and discounts on offer, which have kept margins high, once supply pressures ease.

This could depend on the carmakers themselves, which often push vehicles to dealerships to hit quarterly production targets that then triggers discounting at the forecourts, said Pendragon’s Berman.

“There’s an adage in the car industry: In good times you develop bad habits, and in bad times you develop good habits,” he said.

“Hopefully, everyone will have learned their lesson this time.”

[value hound] 03/12/2021 10:05

Heady stuff today; on the leader-board no less!

Overall, I agree with my value colleagues CJohn and Arthurlamestocks. In other words, it's all about the yield, unless we were ever lucky enough to be delivered a knockout blow. But if you were a scion of the Caffyn family, would you rather receive a one-off big payment of twice the price for your prefs, or lifelong income?

[cjohn] 30/11/2021 12:40

I've just caught up with the results here.

The pension deficit is more likely than not to shrink again by the next results, given the likely rise in gilt rates.

Also note that debt was down from £12.1m to £8.7m over the half year.

So it looks even stronger financially than at the year end.

Sorry to say I agree with Arthur about the family and selling out. Those pref shares are a real brake on the share price.

[arthur_lame_stocks] 29/11/2021 18:32

I just can't see the family selling myself.

[clemo69] 29/11/2021 15:00

Anybody see the Marshall news this morning. They were also valued very cheaply. I think we may be next. I know there is the pref shares issue but after the last results this is fantasy land valuation. You could pay treble the share price and be getting a good deal. Real net assets of £44m which must be pretty solid given the car market and earnings this year of £4 to £5m pbt. All for £13.5m.

[1tx] 26/11/2021 09:46

Yes good results.We are not getting anywhere near the return that Marshall Motor Holdings get on sales/invested capital but an improving trend.The development value of the surplus Lewes property is probably worth at least half the market value of the company which makes Caffyns even more undervalued!I suppose we have to credit the Caffyn family for keeping the company in business & in good shape for the last 150 years!As value hound points out family control limits interest in the shares;together as well with the illiquid nature/huge spread.A return to a dividend helps and I feel the company can well afford to pay out a third of net profits with reducing borrowings and a fall in pension funding gap which should continue.

[value hound] 26/11/2021 07:17

Excellent results and worth twice what it is - notwithstanding the prefs' voting rights issue etc IMO. Resumption of the divi is more important than most situations for this reason (ie otherwise why invest?), so it looks like the intention is to get back to the 22.5p pre-pandemic level.

[cjohn] 16/9/2021 08:49

I'm amazed to see these finally back to the price I first paid in 2015, when I thought they looked really stonking value.

Since then I've been buying all the way down, always with the feeling of throwing good money after bad.

Yet at this price, they are still only trading at a PTBV of 0.33, if you take into account the off-balance sheet property revaluation surplus.

I do think they'd have been taken out long ago, if the family didn't have de facto control through the preference shares.

Am I wrong in thinking that redeeming the preference shares is in the family's own interest, as it would be a catalyst to outing value? They could surely negotiate a take over where they remained as highly placed executives in a bigger company, if that's what they wanted. Maybe, it's the emotional engagement of running their own company that motivates them.

[arthur_lame_stocks] 16/9/2021 08:31

I hope so. I believe the semiconductor shortage is still impacting new car sales but hopefully the second hand market is doing well.

[clemo69] 16/9/2021 08:13

Me thinks results are going to be fairly good!!!

[strathroyal] 15/9/2021 15:35

Totally agree, I would have liked a few more of these as the motor traders recover (VTU shares done well recently) but the spread is unbelievable so have decided to sell when I'm in profit.

[1tx] 02/9/2021 15:45

Thanks for info!

[strathroyal] 01/9/2021 14:06

Up for sale with SHW

[1tx] 01/9/2021 13:23

I note that Harwoods have now transfered their Land Rover business to a new site in Brighton to consolidate with their Jaguar franchise and closed the Lewes site.The Lewes site is now vacant & has I assume reverted to Caffyns.What will we do with it & what is its value/what interest will the property/ site have?

[value hound] 20/8/2021 09:13

Agreed; given the voting rights of the Prefs shares, it's really all about the yield - barring some knockout blow (which would be nice!)

[arthur_lame_stocks] 20/8/2021 09:10

I just hope they return to paying a dividend. I hold these for the income and the security of the balance sheet.

[eezymunny] 20/8/2021 08:59

Insanely good results coming out of car dealers. Strange things going on in the car market. It seems almost possible CFYN could do an H1 number that makes the share price shift pretty rapidly. £3m pbt in H1 anyone?

[3800] 04/8/2021 11:28

At some point I feel the shares will be rerated but it may be a decade or two after I have died. good results from Marshalls today look at their share price graph.