|S & U
||ORD 12 1/2P
||EPS - Basic
||Market Cap (m)
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S&U Share Discussion Threads
Showing 1326 to 1348 of 1350 messages
|Purchase I believe - av value £5k so unlikely to be HP|
|As mentioned above, the SUS share price seems decidedly nervy recently and I wonder whether it has to do with reports in today's papers that the Govt are thinking of cracking down on car finance schemes which seem to be a big factor behind the increase in private debt. From what I have read, they seem to be mainly worried about the contract hire/leasing deals offered by dealers and manufacturers but I am not clear whether this is the model used by S&U's Advantage Finance. I get the impression theirs is a are traditional 'Hire Purchase' sort of scheme.
Is this a threat to S&U's business model?|
|I did too recently but the price is all over the shop. Thought I was clever picking some up sub-£21 and the intraday price promptly dropped below £20. I know it's an illiquid stock but the short term volatility is quite something.|
|Happy to add a few here.|
|Updated Edison note - titled strong growth, cautious approach. Aleman will appreciate that :)
|Indeed. Put in a "hopeful"(I thought cheeky actually) bid a little while back and was very surprised to get it filled this afternoon. I wanted them at the time but now I'm not so sure! However nothing in the past has led me to believe they are leaky on news, so fingers crossed it is just a little fat finger or clumsy selling.....|
Maybe you should be investing elsewhere - you're just trying to find reasons to be negative. Impairment provision is what they do well - they're masters of managing it - you don't get to be 100 years old lending to poor folk with dodgy credit unless you're pretty good at it . The margin makes up for the lack of quality otherwise but banks - they only lend to people who don't need it .|
Any markets exhibiting significant growth will inevitably attract competition, and those for used car finance and property bridging are no exception,” Coombs acknowledged in the outlook statement.
“Both Advantage and Aspen operate in growing markets. These in turn exist within a robust British economy, where the labour market is strong and where the current focus on increasing productivity and reducing regulation should underpin economic growth.
“Our continued purpose is to take responsible and sustainable advantage of this; I am confident we will,” Coombs concluded.|
|Thanks again for the responses. I think I will go back and check some old posts and accounts. I don't normally query like this but was very surprised at the exhuberance that met the results when this industry seems to be entering choppy waters. Some companies might do well. I was just wondering how it might be this one
I've read today's report again and have doubts about the "robust" economic outlook in the face of an 85% increase in S&U's late payers. It soumds worryingly complacent to me. I'd feel S&U would be a better proposition if they had tightened up parameters and preserved the balance sheet more at what appears to be the top of the market. I think we are going into recession as credit markets are definitely deteriorating in the US and UK (and possibly Canada, Australia, India and China). Here are a few relevant links to the US and UK car markets and one that shows Zopa is now expecting record UK default rates for its unsecured lending in 2017 (4.89% projected versus previous high of 4.24% in 2008 and low of 0.69% in 2012). I don't see how the economic outlook or credit markets could be described as robust if lots of lenders are being clobbered by defaults already - mostly online and unsecured so far but it seems to be spreading to car loans and leases and housing. Some economic bloggers suggest the start of the next recession will centred on the car markets and student loans. It's looking more and more like the start of the typical train crash you get as a recession starts. It looks like the US and UK economies have just jumped the rails and it's time to duck and hang on tight.
I'll leave you in peace now while I do some more research. I'm not a shorter. I'm just trying to find the winners after the next recession that might be starting to look good value and are worth monitoring as they become a bargain. Good luck.
If you had the time or inclination, it might give you some perspective to go back and read all 1262 posts above! They cover a period of 16 years, during which we suffered the greatest financial crash. Until recently this company was a 'doorstep lender', relatively recently having diversified into motor finance, and loan quality, collections and impairment are part of their DNA. If they've managed to survive and prosper all this time and in all circumstances, I don't see why their debt management and judgement should desert them now. "Should a company borrow from a bank to give the money to other borrowers"? Well, er, yes, that's what they do (recently having been temporarily in net cash following the disposal of the principal business) and the increasing loan book will always require fresh capital or borrowings.|
|Answer below - Chairmans words. High impairement business funded by high interest pricing and v high profit margins .
'The past three years have seen impairment as a proportion of revenue in a historically low range of 16% to 20% against 25% to 37% in the previous three years when Advantage still enjoyed very good profitability. Since 2015 the record growth and an inevitable increase in competition at the higher quality end of the Advantage product range has seen both a slight upturn in impairment to just over 20% this year and some increase in brokerage costs. These are mainly offset by improved interest rates and so margins continue to be very healthy'.|
|Thanks for the response.
"The increase in impairments is vastly outweighed by those paying"
But how many of those paying now will stop later if the trend is deteriorating so quickly? Where will it end and with what write-downs? Does the company expect to recover all its capital through repossessions?
I'm not a shorter or trying to talk the shares down. I can imagine a company doing well in this sector even in a downturn but I'm concerned S&U look to be increasing too quickly too wrecklessly when some banks are reported to be tightening up and reducing lending (as typically happens ahead of a recession). I'm a value investor that has just looked in here for the first time and I'm genuinely struggling to see how the results could be seen as good if customers seem to be struggling increasingly to pay. I might be a bit oversensitive after reading this article recently:
|Yes you need to read the results carefully. The increase in impairments is vastly outweighed by those paying and almost as good as its best year( read his words).The outflow is due to a 34% increase in revenue from increased loans ( funding the growth).When a business is growing that fast it is likely to invest in it. The returns are pretty stable at @14% . The debt:equity is @35% from memeory so pretty low for a lender. This is a lender to people with poor credit histories thus the high interest rates. It's the game they're in .|
|Loan book has increased significantly in scale due to the funds that became available from the sale of the home credit division last yr. As a result it looks like the proportion of impaired loans has increased & they've probably pushed the envelope a little more aggressively than they have in the past.
Worth considering though that approx 11-12% of loans were impaired in both 2010 & 2011 and this does not seem to have hampered progress in both profitability & the share price since.
S&U have a reputation for managing the business conservatively which is exactly the reason John Lee had a long term shareholding in the company and why many here are happy to be patient and trust the Coombs family. I guess what it really comes down to is whether you think the company has the expertise to manage the level of impairment through the complete business cycle. Have a look at business performance between 2007-2009 which should give you a very clear answer in my opinion.
Always appreciate another view though Aleman !|
|I'm just an outsider looking in here. Doesn't the company's extraordinarily rapid increase in delinquent loans worry holders? If missed payments are increasing so quickly in good times, what happens when the economy slows or even reverses. Don't you think there is a problem if the company is expanding rapidly into a market where 11.8% of loans have missed payments, up from 8.4% a year ago? (note 8 and a bit of maths) I'd find this deterioration alarming. Put another way, there is a £48m rise in the loan book and a £10m rise in impaired loans - in a good year!? To make matters worse the amount owed from customers increased by £48m (note 9) which was the main reason a £27m profit was smashed down into a £27m outflow of cash from operations. More lending is no good if borrowers are not paying back. Am I missing something? I know cash must come from somewhere to lend out but changes in the balance sheet look ominous as cash fell from £18m to insignificant, the overdaft went from insignificant to £11m and the bank loan went from £30m to £38m. Should a company borrow from a bank to give the money to other borrowers with an increasingly deteriorating repayment history in supposedly good times? What happens when things turn worse? Can someone explain to me what happens if we go into recession soon and these loans that stop paying back goes from 11.8% to 20%+.|
|Same applies to me Tudes100.|
|I'd add but its a large holding for me relative to market cap, great results.
Congrats to the board.|
|Absolute text book stuff.Brilliant financial mgmt.All measures conservatively managed Very confidentially communicated.Tortoise & hare comes to mind.Nice uplift in dividend.Very appropriate stock as a core holding...one to buy & forget. It just keeps on delivering with compound growth.Very well done Anthony & the S&U team|
|Revenue up - profits up - dividend up. Cannot ask for more. Back to sleep !!
|Results on Tuesday. Thanks for heads up plasybryn.|
|Family run - very safe hands - sleep easy with S&U (imo) A core holding- pays better than a deposit account !!|
|Results next week. Should be good.|
|Nice write up Tudes100.|