Vertu Motors Share Discussion Threads

[pj84] 06/9/2023 09:17

The following is from the above article:-

"Steve Huntingford, editor of What Car? magazine and website, said: “Many private motorists appear to be putting off new car purchases due to the current economic conditions, with fleet buyers accounting for an increasing proportion of registrations.

“This is particularly true for electric cars, with our website traffic showing that the popularity of these models is on the wane among private buyers due to concerns around the cost and availability of charging.”"

On this view it is a delay and also Vertu's mix of car sales may (i'm not sure) be less affected by the fall in demand for electric cars.

From the same article is a less positive view:-

"Stuart Masson, Editorial Director at The Car Expert, a car buying guide said: “Consumer demand has fallen substantially, and August is not a one-off. The cost of living crisis and rising interest rates are ongoing concerns.” "
"

[pj84] 06/9/2023 08:44

The Times: The new car market has entered a second year of growth after a strong rise in sales last month but retail demand has softened; new vehicle registrations surged 24.4% in August. Retail sales remain 7.5% below pre-pandemic levels.

[c_k] 06/9/2023 08:22

Looking at the SMMT numbers for August the growth is not coming from private sales but fleet. I assume that this is not as profitable for dealers and am concerned with the new agency sales model are the dealers cut out from profiting from fleet sales? Fleet sales also depress margins on service costs as the lease company want value forMoney. Tesla have grown massively and with their direct model there is no dealer involved. I was hoping for higher private sales. Hopefully the private market wanted the new 73 registration and this will grow. I am a shareholder but will be looking carefully at the private sales of cars which are sold through dealers as I am started to get a little concerned with private new car sales. A takeover is still though a possibility.

[mortimer7] 05/9/2023 09:22

UK New Car Registrations for the quieter month of August released today by SMMT.
Total 85,657 being a 24% increase over last years figure of 68,858.

[jonnyno1] 30/8/2023 14:57

Sitting at a c.20% discount to the valuation of Lookers takeover, lookers insti's will move straight into vertu on completion..

[mortimer7] 30/8/2023 11:09

Electric Vehicles starting to be an issue...
"Recent increased supply of new electric vehicles appears to be exceeding retail demand, creating an imbalance in pipeline inventory coming into the key plate change month of September. Manufacturers are reacting to this through the offer of discounted prices and supported finance rates to stimulate retail demand".

So after months of Retailers have a boom time with new car margins due to overall supply shortages, they are now going to be back to the more familiar position of having over supply due to manufacturer production levels. Except, now it is with EV's, an unprecedented scenario. Goodness knows how this situation will be dealt with. That said, of all the retailers, I'd back Vertu to be able to cope. Interesting times for the sector.

[mortimer7] 30/8/2023 09:21

Thank you for posting that davebowler

[santangello] 30/8/2023 09:14

Thanks Dave.

I guess, inevitably, Vertu will now be swallowed up by a predator.

The company will no doubt become the victim of its continuing and flourishing success.

[davebowler] 30/8/2023 09:04

ZEUS-

Vertu Motors

VTU LN | General Retail | 30 August 2023
Vertu Motors is a NOMAD and Broking client of Zeus

Positive trading continues

Vertu has released a positive trading update ahead of its interim results for the six months to 31 August. Aided by the acquisition of Helston in December 2022, Group trading profit is above prior year levels as vehicle supply improves and costs are tightly controlled. FY24 profit is expected to be in-line with market expectations, so Zeus forecasts are unchanged, but today’s positive update increases confidence in our full year estimates. We reiterate our average valuation estimate of 108.0p per share, which provides 55.8% upside from last night’s closing price.

¨ Trading update: Vertu’s new vehicle sales continue to benefit from improving supply, with like-for-like volume growth in New Retail and Motability and its Fleet and Commercial channels. The Group also gained new car market share in the period, indicating ongoing strong execution of its conversion and customer experience objectives. Used car volumes declined 6.3% like-for-like in the five months to 31 July, partly driven by the removal of its popular 0% financing events due to rising interest rates. Used car supply remains tight (see below) and contributed to volume declines, but the Group has increased procurement of used vehicles to maximise future sales volumes. Used car gross profit per unit remains above historic, pre-pandemic levels and was comparable to the prior year. Vertu’s high-margin service and parts operations saw like-for-like revenue growth in the period, albeit still constrained by a shortage of technicians, which the Group has taken further steps to address. The accident and smart repair business, described in our January 2022 ancillary business note, continues to make good progress, delivering revenue and profit growth compared to the prior year. With the Group’s focus on efficiency and productivity, operating expenses as a percentage of revenue were slightly below the prior year, despite cost pressures in areas such as staff costs, energy, and investment in IT platforms. Interest costs increased more than anticipated due to higher stocking loans and the impact of rate rises, but strong trading performance has offset this such that Management expects FY24 results to be in line with current market expectations. As previously discussed, the Group continues to have in place derivatives to hedge part of its exposure to interest rates. Finally, we believe the ongoing share buyback indicates confidence in the strength of the Group’s balance sheet.

¨ Used car prices: The latest data from Cap HPI showed a continued normalisation of used car residual values in August, with average values of three-year-old, 60k mile cars falling 2.0% in August, equivalent to £390. Despite the fall, we continue to believe that low new car sales from 2020-22 will provide support to used car values. Indeed, Auto Trader reported there are 27% fewer sub-5-year-old-cars in the UK parc compared to 2019. Within Cap HPI’s overall measure, used electric vehicle prices fell 1.7% and now appear to be stabilising after a 44.3% cumulative decline over the last 12 months.

¨ Forecasts: In line with guidance, Zeus forecasts are unchanged today, having already upgraded FY24 PBT by 8.6% on 2 March and a further 2.1% to £48.0m on 10 May. In FY25, we forecast 4.1% revenue growth to £4.9bn and 7.1% underlying PBT growth to £51.0m as further Helston synergies are realised and the Group continues to benefit from greater efficiencies due to scale and its technology investment. Zeus forecasts do not yet include the second £3m share buyback, announced 13 June, which we estimate will have a 1-2% positive impact on EPS.

¨ Valuation: In our view, Vertu shares continue to be undervalued, trading on only 7.0x FY24 P/E and yielding 3.6%. On 27 July, Global Auto Holdings increased its offer for Lookers Plc to 130p per share, which is 9.3x Zeus FY23 forecast adjusted EPS. Applying this P/E multiple to our FY24 forecasts for Vertu gives a valuation estimate of 92.2p per share, but we estimate the Group is worth more than this. If the Lookers deal goes ahead, Vertu will be one of the few remaining public market opportunities to invest in a fully-integrated, growing motor retailer. Our average (DCF, long-run P/E, SOTP) valuation estimate is 108.0p per share, offering 55.8% upside to investors.

[buffalobillnuts] 11/8/2023 20:28

Yes agree, adding value to the brand on a worldwide stage.

[santangello] 11/8/2023 19:55

Nice to see Vertu advertising prominently being displayed on Sky Sports Football tonight at Turfmoor :)

[santangello] 05/8/2023 09:47

UK new car registrations jumped 28% year on year in July, revealing another boom for battery electric cars - with one sold every 60 seconds, according to industry figures published on Friday 4th August.

[buffalobillnuts] 01/8/2023 09:28

Cinch already own over 3% of vtu. I doubt they'll purchase another 20% though!
I do like that vtu re purchase shares when it drops below 70p and stop buying when it goes over 70p.
70p is the new normal.

[woodwards26] 31/7/2023 23:25

Be nice to presume but only they know their intentions

[jonnyno1] 31/7/2023 17:29

Presumably Cinch will be rolling their takeover cash into Vertu when Lookers becomes unconditional?

[leadersoffice] 28/7/2023 07:58

Got my first divi from this company

[microscope] 27/7/2023 14:46

Agreed leadersoffice, and Cinch's pockets will be bulging, hopefully burning a hole!

[leadersoffice] 27/7/2023 07:58

Lookers takeover back on. Revised offer upwards. Might see Vertu move upwards

[tomtrudgian] 25/7/2023 14:11

Thank you mortimer7. To update your aged post, uk car registrations per month in 2023 were:
J 131994
F 74441
M 287825 (new reg plate)
A 132990
M 145204
J 177260

The dealer profit margins on new car sales have never been high. Both Volvo and Mercedes new car margins are now fixed, being brokers not dealers. Other manufacturers are following.

So why do I quote the new car figures? How does the number of new car sales affect the number of cars on the road? Which has been gently reducing for many years.

Used car sales and in particular their repairs always had much higher margins. May be fewer repairs in the future. Why? Will say a four year old damaged electric car be worthwhile for insurers to pay to repair or write off? Will owners of undamaged nine year old electric cars, unable to afford a new battery, have to pay to dispose of them?

Stick with the excellent Vertu management.

[drradcliffe] 21/7/2023 09:51

Could well be right...

[microscope] 21/7/2023 09:49

I may be reading too much into this, but I do think it's a rather noteworthy coincidence, even if it turns out to be nothing more, that VTU buybacks stopped on the day of the Lookers bid, and restarted a month later, the exact day that Cinch withdrew support for that bid.I wonder if they (Cinch) might have been running the rule over VTU in that period while considering their options. If VTU had had an informal approach, they would have had to suspend the buybacks in that period.....

[volsung] 20/7/2023 15:19

Bought a few at under 70p

[leadersoffice] 20/7/2023 08:37

Cinch throw a spanner in the works for Lookers after withdrawing there support for the takeover