S & U Share Discussion Threads

[chrismcglone] 28/9/2017 21:21

I will join the speculation as to why the share price has reacted the way it has. Boringly predictable? I still welcome views and opinions and won’t judge. My primary reason for my initial and subsequent modest purchases was always income and dividend growth. It continues to meet (and has probably exceeded) my expectations so I will continue to enjoy those returns. This could eventually turn out to be my first ever 100% yielder. For explanations, please refer to Warren Buffet. Like all great investments (and I haven’t made many), I only wish I had purchased more at 3 quid. Ah well, thems are the breaks - and regrets.

[jeffian] 26/9/2017 19:59

westcountryboy,

I wasn't shooting the messenger, I was shooting the message! (at least the opinion expressed by you without much evidence). I agree with Haywards26 that the recent weakness is all around the market lumping all 'car finance' together, despite the company specifically pointing out that they are not involved in PCP finance which is where any perceived problem is supposed to lie. I don't know about the last 3 years; I have held since 2001 and the principal reason I bought them was dividend yield. The board have continued to reward shareholders through thick and thin via a maintained and growing dividend (though it was touch and go at one point when the divi was barely covered), and I am happy to hold during 'quiet' periods as they pay me a good income for my patience. If only more Boards considered their shareholders' interests so well. I have been increasing my holding at these levels.

[haywards26] 26/9/2017 12:32

The weakness could be as simple as S&U being tarred with the general car financing/HP market generalizations surrounding the potential future bubble burst effect, without understanding S & U's true business model etc

[westcountryboy] 26/9/2017 11:49

Hi jeffian - don't shoot the messenger! I am just looking for explanations of share price weakness. What is your reasoning as to why the share price is lower than it was 3.5 years ago?
cheers
WCB

[tudes100] 26/9/2017 11:33

www.compoundincome.org/blog/a-couple-of-cheap-growing-small-caps

[jeffian] 26/9/2017 11:06

I don't accept that. How can the car finance market be any riskier than the unsecured doorstep lending they were in before?! Most people would rather give up anything than their homes or their car - the two areas SUS is now focused on - so if anything I would have said their market is now less risky not more.

[westcountryboy] 26/9/2017 10:56

Well it's a large holding for me too, though I am not really in love with it because it's some time since it has made me proper money :-(

Thinking on why the share price has not done better since the disposal of the main business three years ago now, one thing that leaps out is the increase in debt. For many years the old business chugged alone with about £20m of net debt. Now it is up to £80m, though admittedly there is some seasonality and one would expect it to fall a bit by the end of Full year.

The amount lent out, which is the great bulk of the non-current assets, is much larger than the total under the old business, though there were then two divisions.

So yes EPS has grown reliably and with it the dividend which has doubled in five years. But this has become a less conservative company and though the directors restated today their belief that the business is stable and can grow for many years, clearly the market regards this degree of exposure to the car finance market as riskier than was the case with the old company, and less certain to keep expanding through good and not so good economic conditions.

[cwa1] 26/9/2017 07:47

I know I'm not supposed to fall in love with a company....BUT.....

[pugugly] 26/9/2017 07:43

Financial Highlights

· Profit before tax: £14.3m - up 20% on last year (H1 16: £11.9m)

· Earnings per share: 96p (H1 16: 79.2p) - up 21%

· Revenue increased by 33% to £37.6m on receivables up 31% to £228.6m

· Gearing at July 17 is 56% (July 2016: 29%) as £32m invested since year end

· First interim dividend increased to 28p per share (2016: 24p per share)

Sleep easy with S&U - Back to rest for another 6 months -

[chrismcglone] 11/8/2017 19:30

Steady as she goes.

[jeffian] 05/8/2017 23:27

It depends what you mean by "big ticket domestic purchases".

"Advantage's average loan size is just GBP6,200"

We're not exactly talking about people cashing in their pensions for a Lamborghini here! As I said before, SUS's market is lending to people who can't access mainstream credit markets for the necessities of life - a (modest) car, or whatever. That demand isn't dependent on the latest model or resale values.

[westcountryboy] 05/8/2017 21:11

I sense that there's a broader problem with companies that seem to be reliant on big ticket domestic purchases - eg houses and cars. The market now thinks that there will be a significant fall in demand - probably Brexit-induced but who knows? I hold few stocks in these sectors but would be interested if anyone can think of a stock of this kind that is doing well at the moment.

[dan_the_epic] 05/8/2017 18:48

My concern here would be if the market keeps on failing to distinguish and if there is a drift into any PCP announcement

Reaction to the results was pretty tepid and seems to be a background seller. Definitely interesting though - watching closely

[plasybryn] 05/8/2017 07:25

Thanks Jeff.Great interview.About time we got back on the upward track.Hope we get a decent dividend announcement increase in Sept.

[jeff h] 04/8/2017 17:59

You will love this then ian:-

hxxp:// www.proactiveinvestors.co.uk/companies/stocktube/7887/su-car-finance-subsidiary-still-driving-trade-upward-7887.html

[jeffian] 04/8/2017 10:30

I know you're not supposed to 'fall in love' with a share.....

But I love this share!

[westcountryboy] 04/8/2017 09:31

Clearly the August silly season has arrived.

Couldn't resist buying more at this price.

[buffetteer] 04/8/2017 08:13

I am struggling to find a reason not to buy more - forward PE of less than 10x on an eps of 199p +20% yoy. Maybe higher interest rates might squeeze margins , higher unemployment ( no sign of that highest ever levels currently just when businesses have been holding back investment)

[plasybryn] 04/8/2017 07:26

Solid growth.Another exemplary performance.Well done.

[cwa1] 04/8/2017 07:19

LOL. The usual excellent trading statement PLUS a succinct sweeping aside of all the major issues that are perceived to be holding SUS back:

Advantage is not involved in the PCP market which has recently come under public scrutiny. Advantage's average loan size is just GBP6,200 so should changes in the PCP market have a knock-on effect upon car residual values generally, this would have only a marginal effect upon S&U's business.

Funding fine. Debt fine. NO PCP. Trading excellent. What's not to like?

[luthier] 04/8/2017 07:11

TRADING UPDATE AND NOTICE OF RESULTS

S&U plc, the hire purchase motor finance and specialist lender, today issues a trading update for the period from its AGM statement of the 18 May to 31 July 2017. It will announce half year results on 26 September 2017.

Trading

Trading at Advantage, our motor finance subsidiary, continues at record levels. New loan transactions are up by 20% and monthly collections are 27% higher than a year ago. Monthly collections hit a record GBP10m from nearly 49,000 customers in July and debt quality continues to be good.

Despite recent speculation as to the strength of the economy and its possible effect on the car finance market, Advantage has seen a steady increase in the number of quality applications it receives. Advantage is not involved in the PCP market which has recently come under public scrutiny. Advantage's average loan size is just GBP6,200 so should changes in the PCP market have a knock-on effect upon car residual values generally, this would have only a marginal effect upon S&U's business.

Aspen Bridging is proceeding cautiously and gradually establishing itself in the bridging market, and gaining traction in attracting good quality deals.

Funding

Committed medium term funding facilities have been increased to GBP95m since the end of the last financial year. This gives sufficient headroom for our anticipated growth and will be reviewed again as our businesses develop.

Commenting on the Group's trading and outlook, Anthony Coombs, S&U chairman said:

"S&U's performance and prospects remain healthy despite the current sentiment regarding the British consumer and motor finance sector. Our robust and well established under-writing processes, and impeccable 17 year track record at Advantage position us to trade well through any foreseeable macro-economic weakness, whilst allowing us to take advantage of the clear opportunities for steady and sustainable growth which we see at present."

[alfie4048] 02/8/2017 10:11

4th I believe. Just bought some.

[nfs] 01/8/2017 08:51

Trading statement due soon?

[pugugly] 31/7/2017 18:23

Dear both - Thanks for your thoughts - Must be a presentation done previouly as the link above states "Published on 9 Jun 2017" My own gut feel, is as you suggest, he is ahead of timeline.

I like and have held SUS for many years and agree with funding requirement target market - Share price weakness may just be a knock on from Provident financial (PFG) and or press comments on BOE looking to tighten credit but need to keep on top of possible weaknesses in the business model.