Redde Northgate Share Discussion Threads

[gohunk] 18/6/2008 09:32

Tom, Steve who ?

[tomkite] 18/6/2008 09:03

Steve is very well informed about Northgate,poss too close but that is for another day.Where I can take issue as a current shareholder is- Northgate do sell the vast majority of their used vehicles (van,car,truck) through 7 sites of their own.All vehicles go to be sold after 28 months which is part of the contract (I am a customer)The company are constantly purchasing stock so it has to be part of a cycle.If Northgate are finding it hard then what are the other 'cheaper' rental companies experiencing.Vehicles that go out at a much cheaper rental per week will have to try and sell the vehicle at the end of its rental period for more money than the market will be prepared to pay but that is just a sign of the present climate.We shareholders have to take the good and bad as we are simply trying to better what we have.Let me just say that in times of trouble we need positive thoughts and teamwork to help us go forward,I hope Steve has a winner or two for us all to ease the pain of being 'less well off' NTG shareholders,many thanks and no offence meant nor taken-Tom

[bearraider] 17/6/2008 21:24

Go hunk

I agree with much you say - Going bust is highly unlikely though NTG does need to make enough money to pay the interest to keep the banks happy but that should not be too difficult.

I think that the 350p - 380p region will provide good support ( but share price may not get there 375p iss is another good support)and good value if NTG can maintain decent profits.

But be careful better to wait till recovery begins and lose 10-20p per share than
lose 50p a share trying to catch it while the market is selling it down.

[bearraider] 17/6/2008 13:07

Seems like NTG may be trying to set up another revenue stream, (from todays news release on Northfield website.)

Northgate Vehicle Hire is presently offering to any business hiring a new vehicle on Norflex, the option of trialling a Vehicle Monitoring unit completely free of charge for three months. This free trial of Vehicle Monitoring allows vehicles to be tracked by satellite while they are out on the road.

The system benefits both companies and drivers by helping them to become greener and safer, but it has the added benefit of reducing costs. Benefits can include reduced fuel use, which can help offset the 35% increase in fuel prices since June 2005.

[bearraider] 17/6/2008 12:07

Debtors at interims = £197m (35.43% T/O) about 130 days
UP from finals..... = £176m (33.46% T/O)
Up from 2006 Int... = £164m (31.31% T/O)

This is creeping up and it will be interesting to see where the numbers fall on 1st July.

Ihis is a crude measure but the number of debtor days seem a bit high and could therefore include some bad debts (but have not checked historically or competitors ratios)

Not sure if vehicles off contract waiting disposal would count in receivables if so that would totally change calculating rental debtor days - reducing them.

pretax AFTER interest are expected to come in around £80m. Debt cover was covered 3.5 x same as past results.

Due to increase in NTG avg interest rates (ECB raised base rates 0.75% from same period 06) at interims the ratio of rev to interest charged had fallen from 15.93 2006 interims to 13.95 at 2007 interims.

Both interest cover ratio and T/o to interest cover will both fall at finals as part of NTG (48% Euro debt floats against Libor and that spread will have increased)

[queeny2] 17/6/2008 10:36

bear - have you looked at debtors at all (I haven't)? I think they have a long book of debtors, wondering if any bad debt prospects? haven't thought about it much myself yet.

[queeny2] 17/6/2008 09:58

i'm amazed too, sometimes right to put the trade on then do the work, bad miss.

I think he thinks it can go bust, but I'm struggling to make that case, but £800m of debt, if ebit fell below £80 with poor outlook you're beginning to get option value on the shares only.

[bearraider] 17/6/2008 01:17

Queeny - amazed you hadn't already taken your dealer friends advice you passed on to me on the other board and shorted the share as you said it was his NO1 short.

Think you may have left it to late to make real bucks in an NTG short with much of the clear downward movement already priced in to spreads.

Unless this company is going belly up i would be very surprised if the share price does not turn either before or in the 350-380p price range as this range is the long term lows dating back to 1995 and also is the last given NAV (exc intangibles)

[bearraider] 16/6/2008 16:37

Residual values are important in determining profitability for NTG but to imply a van rental company has no cashflow other than by selling it's vehicles is clearly rubbish. The main source of cashflow is the rent coming in every month!!!

Three year old white vans with 60,000 miles on them have residual values between 23% and 44% depending on make and model. The Citroen Relay at the lower end the Merc Vito at the top with the Sprinter above the Transit in the middle. It requires running some vans for just over an extra trouble free year for the residual to be paid out. Even the best vans require around 2 extra years rental to pay out the residual.

Some companies with large fleets and access to good mtce will run vehicles till they are older than 5 years and have high mileage not concerned about residuals but only disposing of them when they start to become unreliable.

[queeny2] 16/6/2008 15:21

decided to short some, if on;y to get me to focus harder, but defeated by sliding share price.

[bearraider] 16/6/2008 13:20

Noticed Fleet growth in Spain was 17% at interims
Yr outcome it was expected to be 12% for year end in march statement.

there are several possibles here as I can see

1, Cutting back growth due to slowing 2H demand in Spain
2, Some Seasonality (1H includes all summer- also more cars in Spanish fleet)

In Spain majority is linked to long term construction - EU/GOV funded till 2010/11
fleet growth has been to none construction areas to help diversify.

Only limited van rental on costas (villas). However the various trades/builders who once worked on the resi work are probably big buyers of 2nd hand vans, so this may well contribute to the softening of residuals in Spain.

In UK fleet hire far more diversified
19% support services
17% Civil Eng/ Construction
15% Transport
13% Trades
10% Government

[queeny2] 16/6/2008 12:17

bear thanks. re visibility, what I meant was given that they have decent contracts, into long-term construction often, so they may be surprised if Q2 utilisation has slid, given their fairly bullish utilisation quotes in March, despite, as you say, good management systems and intelligence.

I note in March in UK good utilisation, but "relatively" stable hire rates, and strong residuals, and fleet continuing to grow. I wonder whether util weakens, hire rate continues to be a bit iffy, and I accept from various van websites that residuals ahev taken a beating. In Spain they warned on residuals, whereas util and hire were "broadly in line" whatever that means.

Steve - if they choose not to sell 10,000 vehicles and replace them, ie age 10,000, surely that's, round numbers, 10,000 vehicles x £10,000? Yes, they have stored up further depn for sure, p&l impact and later cash flow impact, but it does make cash and bank debt instantly better surely?

[bearraider] 16/6/2008 10:29

Euro loan is syndicated between 6 European financials recently renewed on terms little changed from prev (about half is fixed at just above 4%)the rest floats against Eurobor with about 17% of balance protected in some way. The bulk of debt due for repayment/renewal in 2010.

Most Sterling debt raised in USA at avg 5.95% most fixed for 5,7 and 10 years

There is over £150m of unused agreed bank borrowing available on the 3 year loan. Which is lower than the debt falling due in the next year.

NTG both in UK and Spain run on a fully integrated IT system and changes in rental patterns/ utilization are easily visible. (needed as NTG operates centralised buying and disposal)

Customer intentions before event can only be judged on the ground, NTG at least trades through over 20+ separate companies in the UK (and though 2 main brands in Spain again these also have maintained separate local brand names where that is advantageous.) Keeping local (keeping loyal) does help with customer relations which will provide better intelligence than through a single 'national brand'.

The Prelims on 1st July will provide the story till end of April hopefully some current Q and future outlook statement will be forthcoming.

[bearraider] 13/6/2008 17:22

Thanks for your concern Steve however if you read the posts on this bb you would know I DO NOT HOLD ANY NTG shares at present - and from the other comments posted neither does anybody else who posts here.