Vertu Motors Share Discussion Threads

[dennisbergkamp] 05/1/2023 12:49

Electric cars don’t seem to add up financially based on their price over conventionals

D

[clive7878] 05/1/2023 12:35

New car sales at 30 year low - of which a fifth were electric.
Society of Motor Traders says that new charging points were not keeping up with demand

[clive7878] 30/12/2022 16:44

One has to remember that because of the new emmision zone being introduced next year - by the motorist friend Major Savid - many people will either have to change their car or pay £12.50 per day.
Could be a lot more people looking for cars.
Not everyone has £ 70k to spend on a Tesla !
Not everyone has a computer degree to understand how to drive one either.

[microscope] 28/12/2022 17:34

Cracking volume to the upside and another surge around 2.30pm.The well-versed among you are unlikely to miss the point.....

[microscope] 24/12/2022 20:35

Happy Christmas to all VTU posters (yes, all ;) ).An estimated 17 million car journeys today, and massive increase in use of cars since rail strikes started.A simple but useful reminder that the motor remains a must have for almost all.Not a choice.

[clive7878] 23/12/2022 18:42

What will diesel drivers do next August - affecting 37% of London cars when the low emission zone is extended to the M25 - buy an electric car, or petrol car, or pay the £12.50 per day ? Will that spark a buying of second hand / new cars ?

[sunshine today] 23/12/2022 16:21

The moaning about electric cars is astonishing over the last two weeks.

Batteries are proving pure rubbish in the cold.

Cars don’t grip the snow just slide.

Basically utter rubbish, a fad that is now well and truly over.

[woodwards26] 23/12/2022 16:10

Electric cars have taken a battering on values across the market in December well above their petrol and diesel models . Probably just an overdue revaluation as the numbers increase plus a bit of panic after the recent cold weather hit the range they can travel hard .At some point electric and combustion cars have to align in price or at least in 3 yr running costs which is really what drives the monthly lease or pcp value.So I don't at this stage think Tesla introducing incentives is anything to influence thoughts on Vertu or in my case lookers shareholdings.

[sunshine today] 22/12/2022 18:37

Umm

Look for a sales slump in 2023.

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Tesla Offers Rare $7,500 Discount To Boost Holiday Deliveries

Tyler Durden

THURSDAY, DEC 22, 2022 - 05:17 PM

One day after we reported, Tesla Inc. implemented a hiring freeze and a new round of layoffs. News for the EV company worsened as it offered a rare discount on Model 3 and Model Y vehicles, a sign that demand is softening.

Discounts on Model 3 and Model Y vehicles delivered in the US this month had discounts of $7,500, according to the company's website. That's up from the $3,750 credit it offered previously. On top of that, another perk was offered: free supercharging for 10,000 miles.

[wad collector] 21/12/2022 13:23

I suspect a lot of property portfolios are undervalued. Unless a company is being sold , there is little incentive to stump up a significant valuation fee to update the accounts.
Our family business has not done a property valuation for 20 yrs for that reason, which will only be a problem when someone wants to sell a share.

[microscope] 19/12/2022 10:36

Thanks Dave. Great to see the acquisition completed before the holidays and ahead of schedule, should mean more than two months of contribution to this year's profits.Liked the comment in the RNS about 'impressive and well-invested' property portfolio, which makes me think they feel it's conservatively valued.

[davebowler] 19/12/2022 09:33

Zeus-
Helston completion

Vertu’s acquisition of Helston Garages Group has completed and we have updated our forecasts, increasing FY24 and FY25 EPS by 18.7% and 24.7%, respectively. This debt-financed transaction takes our forecast FY23 net debt to £105m (incl. stocking loans) or 1.4x EBITDA, but we anticipate this to fall to c. 1.0x EBITDA by FY25. Our updated valuation is now 105.9p per share, offering 102.4% potential upside to investors.

¨ Acquisition overview: VTU has completed the share purchase of Helston Garages Group “Helston”; following its announcement on 8 December. Vertu has acquired 28 of the 38 outlets operated by Helston across 8 brands, 21 locations, with 770 employees and freehold assets with a value of £66.7m (valued this year). The remaining outlets and assets were acquired by Yeomans Limited pre-completion.

¨ Key strategic rationale: Helston has been known to us for some time as a well-respected business with strong presence in the South West of England. In the year to 31 December 2021, the acquired businesses delivered revenues of £499m and adjusted PBT of £17.9m, selling 13,300 vehicles and 225,000 labour hours. This transaction increases Vertu’s franchised sales outlets to 188. This also strengthens relationships with key premium brands such as BMW, Mini and Jaguar Land Rover, and adds new relationships with Volvo and Ferrari. Vertu will be able to apply its innovative Click2Drive and other digital services to the acquired businesses, which we expect will drive revenue synergies.

¨ Financials: Total consideration of £116.5m (net of cash and cash equivalents) includes the significant £66.7m freehold property portfolio and £28.6m of goodwill. The transaction will be funded out of existing cash, new mortgage facilities and a refinanced RCF. Synergies of £3.2m per annum are expected by FY25. Vertu has paid 6.8x EBITDA based on an acquisition EV of £120.1m (net assets, plus goodwill, less acquired cash, including additional capex, proceeds from sale of surplus properties and working capital improvements) against the average adjusted EBITDA (excl. IFRS 16 impact) of £17.7m delivered by the acquired businesses between 2019 and 2022.

¨ Forecasts: With Helston only being part of the Group for c. three months in FY23, the impact on our P&L forecasts is minimal in that year (+2.7% revenue, +1.6% PBT). For FY24 and FY25, revenue increases 12.1% to £4.4bn and 12.2% to £4.6bn, respectively, driven by higher unit sales, higher average selling prices, and aftersales revenues. FY24 underlying PBT increases 18.7% to £43.3m, whilst FY25 increases 24.7% to £51.4m as the full impact of synergies are realised. We forecast an acquisition ROCE (incremental EBIT / consideration) of 11.7% in FY24 and 14.6% in FY25, in excess of Group WACC of 8.5%. We forecast net debt of £105.0m in FY23 (including stocking loans) or 1.4x EBITDA, falling to £90.8m by FY25 (c. 1.0x EBITDA). Forecasts for Vertu’s underlying business are unchanged.

¨ Valuation: Based on our updated forecasts, Vertu trades on only 6.1x FY23 P/E, falling to 5.1x by FY25. We think this is materially undervalued. The average of our updated valuation estimates (DCF, long-run P/E, SOTP) is 105.9p, offering 102.4% upside to investors. This is broadly the same as our 104.7p estimate from our 5 October note, with the value-enhancing acquisition of Helston offsetting the fact that we are now using a lower multiple (9.0x instead of 12.0x) for long-run P/E and are using conservative DCF assumptions (10.2% discount rate, nil terminal growth).

[tomps2] 19/12/2022 08:41

Vertu Motors plc (VTU) Acquisition of Helston Garages Group Ltd - December 2022

Vertu CEO, Robert Forrester, runs through the Helston Garages Group Ltd acquisition, including the strategic rationale, the positive earnings and free cash flow accretion, and the acquisition structure and financing details. Vertu Motors completed the acquisition on 19th December 2022.

Watch the video here:

Or listen to the podcast here:

[clive7878] 14/12/2022 21:52

If vtu are ex divi today - 15th - then the share price may take this into account today.

[kenmitch] 13/12/2022 16:53

Effortless Cool.

No I don’t hold CFXI and agree that if a Company can afford to buy back 75% of their shares then that’s a rare example where buybacks worked well for investors. Next too have bought back more than half their shares and that’s likely helped the share price too. I know nothing about CFXI and therefore whether the huge amount they must have spent on buybacks could have been invested equally or more successfully in the business.

I don’t dispute that occasionally buybacks are effective with Next an example. So was Riverstone Energy Investment Trust when announcing a big buyback when the share price was at a crazy 65% discount to NAV. I actually bought Riverstone on that news and the share price went up fast.

But these are exceptions and imo the vast majority of buybacks, often done regardless of whether or not the share price looks cheap and where share price performance subsequently disappoints are a waste of money.

I agree about Motor sector and hold LOOK and VTU. The so called near certain bids for both haven’t come though!

[essentialinvestor] 13/12/2022 10:08

ken, I'm guessing you do not hold CFX!, one of my longer term holdings.
CFX have bought back and cancelled circa 75% of their shares over the past 20 years
plus.


2023 looks a tougher year for the car dealers, but the sector worth at least watching for opportunities.
Tbf it's going to be a challenging year for most businesses.

[kenmitch] 13/12/2022 09:18

m_kerr

Thanks for trying. I agree with all the theory in your post and nearly always do agree with the buyback theory. The case for buybacks is in theory indisputable.

What I do is then go on to look at how that theory worked.Few if any buyback fans bother to do that MUST DO research. And it’s when it comes to the vital bit, subsequent share price performance, that the theory fails us time and time again.

I agree about Next as a rare exception where the theory actually worked. But even Next who, unlike most Companies, only buy back when believing the shares are good value, have still sometimes bought back ahead of substantial share price falls.

As for your Vertu example. Again the theory is totally convincing. But have you ever seen a takeover where previous buybacks have been taken in to account by the bidder? Or ever mentioned in discussion of the merits or otherwise of the size of the premium? I haven’t. Not once! I doubt that bidders take buybacks in to account at all when considering and then going for a bid.

[clive7878] 13/12/2022 08:28

lovewins - I am the same as you at present - question is which way in the short term are vtu and pdg going. Currently at 8.15 vtu are 51.45 and pdg 19.35
There does not appear to be any new brokers forecasts out for either
last was vtu for 2023 at £38.5m which would make a pe of around 5,
but with the extra profit from Heston it could well be lower,
pdg share price is obviously a lot better value at 19.35 than 27/28p but pe ?

2023 year will be a tough year especially with those having to re-mortgage
and with energy bills still rising, but petrol is now back down to 152p from the dizzy heights of 191p

[clive7878] 13/12/2022 08:06

That 30% premium with consolidation into the buyout company could with economies of scale end up being worth a much less if they can make better use on the company.
What is said though above does make sense, in buying back one's own stock at less than asset value is cheaper than buying another one at a premium.

If you take Currys though - share price of 66p the asset value far exceed share price,
they could well do a buy back when profits gets going again, which would make sense.

Ex divi date Thursday for VTU
VTU is cash generating, borrowing too much may not be such a good idea to expand too quickly,
although interest rates are due over next year to fall from present highs. But one has to take ones opportunities..

[woodwards26] 13/12/2022 01:11

If only it was that clinically simple . Vertu right from the outset have had a clear vision just buying their own shares back wouldn't be following that vision which has worked so far for them.

[m_kerr] 12/12/2022 21:49

'What do they achieve please?'

lets say you have 5 people who each own an equal share in a company that owns a house worth £1m. would it be a good idea for the company to buy out one person wanting to sell his interest for £100k? yes, because the value is £200k. would it be a good idea to buy out another wanting to sell his share for £300k? no.

the same principle applies to companies. if vertu has net tangible assets of 70p a share, then buying out other shareholders at 52p a share leads to an immediate uplift in the NTA per share of remaining shareholders. instead of buying discounted vertu shares back, the board have instead bought a more expensive alternative.

as for examples of share buybacks done well, look at next plc or dunelm for UK retailers. or warren buffet's comments on them.

lets assume vertu was taken over at £350m, roughly equal to NAV. with no buyback, each share would be bought out at about £1, compared to a 52p share price today. a £50m buyback at 52p a share would lead to that takeover price being £1.17 per share if bought at NAV (as they'd have £50m less on the balance sheet). if that £50m is instead used to buy a company at a premium to book, then the takeover price would be less than £1 per share.