Redde Northgate Share Discussion Threads

[nishg] 20/5/2019 09:40

Soon to hit 450.00..

[rental] 26/6/2018 08:14

They still have the issue of smaller rental company’s also building up fast in to very worthy competitors of Northgate, going back 15 years Northgate lapped these up with acquisitions. Which is exactly what they need to start work on now in my opinion, I have mixed views on the results but will keep to myself for now.

The rental market is very strong at this time, the disposal market is the strongest ever due to limited supply, which I personally think is due to brexit uncertainty and manufacturing not opening new production lines for right hand drive vehicles due to the uncertainty ahead, instead manuafactuers are working hard on left hand drive models. Hence very limited supply of used commercials, better reduials can’t spell that today no spell check.

People interested in investing in rental, maybe should look for higher returns in smaller local rental company’s, all I hear is massive profits all round at the moment.

Northgate should now be on the acquisition trail now or I fear will lose market share very fast.

[sam66] 26/6/2018 07:22

Well done NTG


Full year Highlights

New strategy implemented during the year created strong momentum in our markets:

· UK vehicles on hire (VOH) returned to growth, with organic year-end closing VOH 6.9% higher.

· 3,400 further vehicles now acquired in the UK following a competitor entering administration.

· Relaunched minimum term rental proposition, delivering strong growth in both Spain and UK

· Step up in VOH in Spain drove 14.8% growth in rental revenue.

· New fleet optimisation strategy implemented during final quarter, to improve future cash returns.

· Refinancing agreed to extend majority of the Group's Revolving Credit Facility for one year and to increase the leverage covenant.

· Final dividend 11.6p per share proposed (2017 11.6p) taking the total dividend payable for the year to 17.7p per share, an increase of 2.3% (2017: 17.3p).

(1) Refer to GAAP Reconciliation and Glossary of terms note.



Kevin Bradshaw, Chief Executive of Northgate, commented:

"During the year we comprehensively overhauled Northgate's rental strategy to address the compelling growth opportunity in our markets, and we have made good progress implementing this, ending the year with real momentum in both our main territories.

Our self-help turnaround programme in the UK started to deliver tangible results, with more competitive pricing, commercial agility and competitive new propositions reversing the previous decline in VOH, which ended the year 6.9% higher on a like-for-like basis than at the same time last year. We have now acquired more than 3,400 vehicles following a competitor's entry into administration, reinforcing our momentum in the market.

In Spain, our rate of growth stepped up substantially as we used our leadership in flexible hire to launch new propositions into a wider range of target markets. This drove strong growth in VOH and rental revenue, and our market leading operations ensured that rental margins were maintained, as we deployed substantial additional capital to grow our fleet.

In both Spain and the UK our profits from disposals were significantly lower, due to a range of legacy commercial and financial factors. We have now implemented a new fleet optimisation strategy across the group, that will extend vehicle holding periods, create a more efficient capital base and maximise shareholder value.

In October 2017 we set out targets for our businesses, and we are now evolving these further, to reflect the material developments over the past six months, and to relate our targets more closely to our key financial indicators, including rental profit and cashflow. Our overarching medium-term objectives have not changed, which are to deliver strong revenue growth, expanded margins and attractive returns for shareholders, and we are encouraged by progress made to date."



Outlook & Guidance

UK

The VOH growth delivered during the second half of FY2018 has continued into early FY2019, providing an encouraging start to the year. The market remains competitive and although there are indications of price pressure easing, significant cost pressures remain, including OEM price increases as well as investments to drive growth and improve our operating efficiency.

In line with previous guidance, we expect mid-high single-digit organic VOH growth in FY2019 and, with the addition of the VOH impact of the vehicles we acquired, this is expected to drive strong rental revenue growth. Our continuing focus on driving growth, and the costs of our business transformation programme, are expected to lead to rental margins being broadly flat in FY2019.

Rental profits are expected to grow significantly beyond FY2019, with VOH expected to continue to grow in line with previous guidance, and margins expanding due to operational leverage and efficiencies being delivered as a result of our transformation programme.

From FY 2019 Ireland will be reported as part of the UK and this guidance includes Ireland.

Spain

The VOH growth delivered during the second half of FY2018 has continued into early FY2019, demonstrating the continuing momentum in the business. We are seeing some increasing price competition in the flex rental market, as well as continuing cost pressures including the cost of network expansion.

In line with previous guidance, we expect double-digit VOH growth in FY2019, driving continuing strong rental revenue growth. Rental margins in FY2019 are expected to expand due to the positive impact of depreciation rate change previously guided.

Beyond FY2019 further rental profit growth is expected, driven primarily by previously guided growth in VOH and operating leverage.

Group

Group operating profits in FY2019 will be impacted positively by the change in depreciation rates implemented with effect from 1 May 2018, partially offset by the remaining negative impact of previous rate changes, in line with previous guidance.

Group rental profit is expected to grow strongly, driven by continuing VOH growth and expanding margins in Spain.

As previously guided, due to the new fleet optimisation strategy introduced in the final quarter of FY2018, which will extend vehicle holding periods by 3-9 months, vehicle disposal profits across the Group in FY2019 are expected to be significantly lower than in FY2018.

The interest charge in FY2019 will be higher due to the higher net debt and the higher margin charge this incurs.

Beyond FY2019 we expect further rental profit growth, and higher disposal profits, as the process of fleet aging is completed and disposal volumes increase.

ROCE in FY2019 will be impacted by the reduction in disposal profits, as the fleet is aged, and by strong growth in VOH, with capital employed increasing ahead of the profit from the growth vehicles.

Capex and cash Flow

The reduction in vehicle disposal volumes in FY 2019 due to the implementation of the fleet optimisation strategy will be reflected in Group net replacement capex, which is expected to be 25-35% lower than in FY2018. This will deliver an increase in EBITDA less net replacement capex in FY2019 of £50-£70 million.

Organic growth capex in FY2019 is expected to be in the range £90-120 million, and to generate marginal returns substantially ahead of WACC. Beyond FY2019 growth capex will reflect the continuing strong VOH growth anticipated.

Net Debt

We plan to maintain our balance sheet within a target leverage range of 1.5 to 2.5 times net debt to EBITDA, and during periods of significant growth we would expect leverage to be towards the higher end of this range. This is consistent with our objective of maintaining a balance sheet that enables us to finance our growth plans, is efficient in terms of providing long term returns to shareholders, and safeguards the Group's financial position through economic cycles. This updates our previous the leverage guidance of 1.25 to 1.85 times net debt to EBITDA.



GAAP reconciliation and glossary of terms

Throughout this document we refer to underlying results and measures; the underlying measures allow management and other stakeholders to better compare the performance of the group between the current and prior period without the effects of one-off or non-operational items. Underlying measures exclude certain one-off items such as those arising from restructuring activities and recurring non-operational items. Specifically we refer to disposal profit. This is a non-GAAP measure used to describe the adjustment in depreciation charge made in the year for vehicles sold at an amount different to their net book value at the date of sale (net of attributable selling costs).

A reconciliation of GAAP to Non-GAAP underlying measures and a glossary of terms used in this document are outlined below the financial review.

[sam66] 17/5/2018 23:25

Yes still here unfortunatly still have some from there highs the information I have is all good I reduced as the graph turned negative but never expected them to get this low. Taking on T O M van hires vans and customers would be helpful and still expect to get back towards previous levels .

[blobby] 15/5/2018 14:46

Good day today. No surprise in the announcement but I guess the market is pleased to have Northgate's plans confirmed in actual numbers.

[ttny2004] 15/5/2018 08:57

Sam66 - Are you still holding NTG. Have recently over last 3 months bought in. Think good potential over coming couple of years.

[ttny2004] 15/5/2018 08:30

Great results. Well done Northgate. With UK acquisition bedded down over coming quarters very strong UK growth should be expected. Spain still going strong.

[carcosa] 17/4/2018 05:22

hxxps://www.thetimes.co.uk/article/crystal-amber-investor-attacks-disappointing-performance-of-northgate-white-vans-vgd8qsltr

[rental] 22/3/2018 14:09

in the old days ntg bought out smaller rental companys, not seen them do this for a while now, and smaller rental co's are now growing in to large rental co's

who knows

[boldtrader] 09/3/2018 20:56

Could ntg be a possible takeover target??

[cryptotrade] 09/3/2018 10:18

may get some nice trade up .

[eastbourne1982] 22/2/2018 10:18

It was basically a profit warning however there is some hope of a turnaround here hence why the share price isn't down 25%.

Tough one to call however I certainly wouldn't short this.

[blobby] 22/2/2018 09:38

I think this bit is the problem in the trading update:

"Operational cash generation is not impacted by the fleet optimisation strategy so despite the planned reduction in disposal volumes, FY18 EBITDA is not impacted by this strategy. However, underlying FY18 PBT is expected to be c.25% lower than the GBP75.0 million reported in FY17 due primarily to the application of this strategy but also a reduction in UK rental profit."

As I understand it they are keeping the vehicles a bit longer so there will be a period in 2018 when they will not be selling vehicles as they would previously. This impacts the profit in that year, but it is a temporary effect and has longer term benefits.

[nav_mike] 22/2/2018 09:18

Price is probably supported by the last NAV which was around 387p iirc

Whether this latest accounting policy change will affect this positively is probably not something we will know in the short term

[cxs1] 22/2/2018 09:13

Agree this one does seem to get hyped, and difficult to assess for fair value and potential, especially with the broker sentiment - I mean just thinking back to the "investor relations day" in Oct 17, without fundamentally different news it was then trading around 460p. The long term trend has been downward though.

[robsy2] 22/2/2018 08:57

The problem here is the share price tells a different story from the brokers ratings.NTG is a highly geared business with good accounting profits but low cash conversion. Lots of debt and leasing commitements, very competitive end markets, free cash flow stubbornly low , doubts over resale values. so while the accounting figures look good and the divi looks pretty attractive I think there is real risk here.Spain is running well but I am not tempted.
R2

[nav_mike] 22/2/2018 08:04

That update not liked by the city it seems....struggling to exit the opening auction as currently uncrossing at 300p

[cxs1] 22/2/2018 07:34

Trading Update out today..Not sure about the extended holding periods to reduce vehicle disposals to maximise ROCE blab but reduce disposal profits - you'd hope they were optimally structured this way already! I suppose they can spend less on new stock and seems like they expect to maintain the divvy policy. With Spain being the ongoing good news though, must be a Brexit sensitive business?

[stewart64] 02/1/2018 15:51

Google and Hargreaves have twice today had this share at fourpence...first time must have given some shareholders a heart attack. Also still showing as trade low. Just very poor that these glitches happen.

[blobby] 20/12/2017 15:57

I've bought yet more. I thought the half year report was OK

hxxp://ir.euroinvestor.com/Tools/newsArticleHTML.aspx?solutionID=2298&customerKey=NorthgatePlc&storyID=13741821

and did not really justify the drop in share price

[clarky5150] 19/12/2017 17:44

Home » Reports » Broker Ratings » Northgate plc 48.3% Potential Upside Indicated by Jefferies International
broker ratings
Northgate plc 48.3% Potential Upside Indicated by Jefferies International
Posted by: Amilia Stone 13th December 2017

Northgate plc with EPIC/TICKER (LON:NTG) had its stock rating noted as ‘Reiterates217; with the recommendation being set at ‘BUY’ today by analysts at Jefferies International. Northgate plc are listed in the Industrials sector within UK Main Market. Jefferies International have set a target price of 600 GBX on its stock. This is indicating the analyst believes there is a potential upside of 48.3% from the opening price of 404.5 GBX. Over the last 30 and 90 trading days the company share price has decreased 36.5 points and decreased 5.5 points respectively. The 52 week high share price is 575.5 GBX while the year low share price is currently 382.25 GBX.
Northgate plc has a 50 day moving average of 441.16 GBX and a 200 day moving average of 475.90. There are currently 133,232,525 shares in issue with the average daily volume traded being 346,480. Market capitalisation for LON:NTG is £538,592,482 GBP.

[stewart64] 31/8/2017 10:27

Yep I like this one Blobby, so do the brokers. Not reflected in the price which remains at annual lows, guess this one is assumed to be Brexit sensitive.

In the meantime if anybody can come up with an FTSE all share stock that trades at a p/e of 8, has a price to book of one and a dividend of +4% with 2.6 cover, I'd liked to be in the know.

Most of these bargains like Lookers, Connect Group etc have far more precarious balances sheets, higher price to books and lower margins.

[blobby] 14/8/2017 10:47

I've bought some of these shares today. Low p/e, rising dividend, good asset cover, relatively simple business model.

[steveglobal4] 28/6/2017 12:17

I think the best thing for northgate now is a few smaller acquisitions.