Vertu Motors Share Discussion Threads

[daneswooddynamo] 17/10/2023 16:26

A print at 80p, maybe Autonation is selling a dummy and going to land here instead of pdg

[pj84] 17/10/2023 09:34

From the above: -

"A mix of pent-up demand from motorists tied into maturing finance deals and a shortage of supply from the automotive industry has pushed up car prices by between 20 per cent and 33 per cent, according to industry figures.

Latest filings show that Sytner paid a £33 million dividend for 2022 to Penske Automotive, its American parent company, which acquired the group two decades ago. Penske has been among the suitors showing an interest in buying Pendragon, another of Britain’s top five motor dealership groups."

[davidosh] 16/10/2023 20:17

Vertu are on the BASH in the Mello Monday show this week

[lammylover] 16/10/2023 08:38

VTU were tipped in the Times over the weekend - potential t/over target following on from takeovers of Lookers, Cambrian, Pendragon etc.

[daneswooddynamo] 12/10/2023 14:59

Seems very firm might well have had the obvious approach. No sign of any buyback activity but maybe they are being very disciplined given share price

[buffalobillnuts] 12/10/2023 13:59

Lookers money won't arrive until the 20th October.
This rise, I think is a market re rating.... but who knows!

[mortimer7] 12/10/2023 12:03

Share price up over 79p this morning - 5 year high (at least).
Ex Lookers money maybe?

[wad collector] 10/10/2023 11:05

Bullish article in IC this weekend FWIW , pointing out the low P/E and isolated position in sector now.

[tomps2] 06/10/2023 10:07

Vertu Motors (VTU) Interim results presentation - October 23

Vertu Motors CEO, Robert Forrester and CFO, Karen Anderson present interim results for the six months ended 31 August 2023. The group saw record revenues, year-on-year profit and dividend growth.

Watch the video here:

Or listen to the podcast here:

[mortimer7] 05/10/2023 10:33

SMMT Figures this morning for UK new car registrations for the month of September show a 21% uplift on Sept 2022 with a total of 272,610 this September vs 225,269 LY.

[daneswooddynamo] 05/10/2023 09:53

The dollar strength has clearly helped the assault on the sector from the big U.S. groups but what you have to remember is that they are paying these prices for these companies thinking that they are going to make a very good ongoing return. Just shows how useless uk investors have been in valuing them. Lookers had ended up being taken over at a relatively small premium to nav, making 70- 80 million a year and being valued at 500m ( after they were happy to let it go for 450 million ) . Hopefully with vtu being the last quoted dealer group of size and probably the best managed they will extract a top price if the bidders come knocking

[davebowler] 05/10/2023 09:19

Citywire-
Vertu Motors is too cheap given the value, says Liberum
Car dealer Vertu Motors (VTU) is offering a strong track record of growth in a market where takeover bids are increasingly providing the value, says Liberum.

Analyst Sanjay Vidyarthi retained his ‘buy’ recommendation and target price of 120p on the stock, which was trading at 71p on Wednesday.

It delivered strong first-half growth, supported by the acquisition of Helston Garages, with profit before tax up 11.7% to £31.5m.

‘There are many moving parts to the new and used car markets, but Vertu is navigating them well, balancing market share gains with profitability,’; said Vidyarthi.

He said trading in September was ‘robust’ and guidance is unchanged.

‘A current year 2024 price/earnings of 6.6x is just too cheap for a business with an excellent growth track record and a strong balance sheet, in prime position to consolidate the market,’ said Vidyarthi.

‘Value in the sector has been highlighted by the bid premia for Lookers (LOOK) and Pendragon (PDG).’

[davebowler] 04/10/2023 09:16

For FCA purposes this is a Marketing Communication



Vertu Motors

VTU LN | General Retail | 04 October 2023
Vertu Motors is a NOMAD and Broking client of Zeus

Benefitting from scale

Vertu’s interim results to 31 August show record H1 revenue (£2.4b), strong year-on-year adjusted PBT growth of 11.7%, and interim dividend growth of 21.4%. Zeus forecasts for FY24 adjusted PBT are unchanged, but we factor in year to date share buybacks, which boosts FY24 EPS by 0.6% and FY25 and FY26 by 0.8%. In our view, recent takeovers and proposals in the quoted UK motor retail sector highlight how Vertu is undervalued. We remain comfortable with our 108p valuation estimate, offering 51.1% upside to last night’s closing price.

H1 results: Highlights from the interim results include 21.1% revenue growth to £2.4bn, driven by core Group revenue growth of 8.1% and aided by the acquisition of Helston Garages in December 2022, and an 11.7% increase in adjusted PBT to £31.5m, showing good management of cost pressures. After net debt (ex. leases) at the end of FY23 (£75.4m) was £9.6m better than we forecast, it increased to £90.7m at 31 August 2023 due to higher used vehicle inventory levels. We forecast leverage to fall to c. 0.8x adjusted EBITDA by the end of FY24, which is very manageable, in our view. Further, the Group’s 21.4% increase in the interim dividend to 0.85p per share and another £3m allocated to share buybacks demonstrates confidence in the strength of the balance sheet.

Key drivers: Many of the key drivers to H1 performance were flagged in the 30 August trading update. New vehicle sales benefitted from improving supply, with like-for-like volume growth of 1.1% in New Retail and Motability, 9.9% in Fleet, and 6.2% in the Commercial channel. The Group increased UK retail market share in the half to 4.6% (H1 2023: 4.1%), aided by its increased dealership footprint. Vertu’s New Retail and Motability gross margin dipped slightly (-0.3pp to 8.2%) due to a 3% increase in average sales prices and slight weakening in gross profit per unit (GPPU), down 4% to £2,016. Used car sales volumes declined 5.7%, partly because of the removal of its popular 0% financing events and tight used car supply. Vertu has increased procurement of used vehicles to maximise future sales volumes, contributing to higher net debt. Used GPPU rose to £1,535 in H1 2024 (H1 2023: £1,468), evidencing the Group’s robust inventory pricing disciplines. Vertu’s high-margin service and parts operations saw like-for-like revenue growth of 5.7% and 11.8%, respectively, in H1 2024. The company is sourcing increased technician resource, to capture more aftersales revenue and profit. Operating expenses as a percentage of revenue (9.3%) were slightly below the prior year (9.6%), despite cost pressures in areas such as staff costs and energy, demonstrating the Group’s focus on efficiency and productivity. Net finance charges increased £6.8m to £9.9m, reflecting acquisition debt, higher vehicle funding charges, and interest rate rises.

Forecasts: Vertu’s board anticipate FY24 profits will be in line with current market expectations, therefore, Zeus adjusted PBT forecasts are unchanged. We have, however, increased FY24 revenue by 1.9%, adjusted EBIT by 5.1% to £67.5m, and net finance charges by 20.1% to £19.5m to reflect interest rate rises and higher vehicle funding charges. The Group still has derivatives in place to mitigate part of the impact of rate rises. Capex forecasts have been reduced for FY24, with the cash benefit partly offset by a higher inventory balance at the year end. We also factor in 7.7m shares bought back in the financial year to date at a cost of £5.0m, but do not yet include the further £4m allocated to buybacks. If executed, we estimate the remaining £4m will have a 1-2% positive impact on adjusted EPS in FY25 and FY26. Zeus forecasts for FY24 imply H2 2024 adjusted PBT of £16.5m, a 66:34 H1:H2 split. This captures the typical H1 weighting, plus the expectation that rate rises throughout 2023 will have a greater impact on consumer demand and interest costs in the second half of FY24. Strong September trading increases the confidence in our full year estimates. Furthermore, the Group has a good pipeline of bolt-on acquisition opportunities that are not included in our forecasts but have the potential to boost medium-term profits.

Valuation: We believe Vertu shares, at 7.0x FY24 P/E, continue to be undervalued and this has been highlighted by recent takeovers and proposals in the sector. Lookers was acquired at 9.3x P/E and Pendragon has a recommend deal to dispose of its UK motor retail and leasing business for £367m (c. 9.0x FY23 P/E), plus two conditional proposals at 32p per share (c. 11.0x FY23 P/E, albeit this includes the Pinewood software business). If any of the three Pendragon proposals go ahead, Vertu will be the last remaining opportunity to invest in a public, fully-integrated, growing motor retailer. Our average (DCF, long-run P/E, SOTP) valuation estimate is 108.0p per share, equivalent to 10.8x FY24 P/E, which we think is supported by the recent sector takeover activity and Vertu’s growth prospects.

[daneswooddynamo] 04/10/2023 08:07

How on earth could funds have been used differently to make the company more attractive to a suitor? They are now a near 200 strong dealer group and the large overseas investors are falling over themselves to buy up scale and into the sector

[microscope] 04/10/2023 08:03

Another strong set of results, and confident of meeting FY expectations.There are benefits from the Helston acquisition that, while as M Kerr has suggested, funds could have been used differently to make the company more attractive to a suitor, take the company in a positive direction in terms of strengthening its position as the leading independent.Dividend up, cash position remains decent and business, including latest month figures, clearly performing well.

[daneswooddynamo] 04/10/2023 08:01

Debt up by 15m as they restocked used cars and their accounting calendar falling just before the September plate change is the reason. If vtu gets to make its next full year announcement before being swallowed up I will be most surprised

[blackhorse23] 04/10/2023 07:51

Debt up by 90m & free cash in negatives territory , switching to APH & WJG

[m_kerr] 01/10/2023 12:23

it's lack of valuation is so much of an issue now as a year ago, as the share price has moved much closer to fair value.

but they should have taken full advantage of the mispricing by buying back as much stock at a discount as they could, rather than instead using that capital to buy other companies at significant premiums. that error of capital allocation has cost shareholders a vast amount of value, albeit most won't notice or care about because the price has nearly doubled YOY, even if that gain could have been far higher.

[daneswooddynamo] 29/9/2023 18:13

Whilst property asset backing is ultimately valuable these businesses run their operations from that property. They are very cheap on the profits they churn out from those properties, that’s where the value is

[tomps2] 29/9/2023 15:01

Vertu Motors (VTU) Interim results webinar

Thursday, 5 October, 1:00pm

Vertu Motors CEO, Robert Forrester and CFO, Karen Anderson will present Interim results, followed by Q&A

Register here: bit.ly/VTU_H1_results_webinar

[wad collector] 29/9/2023 14:29

Property valuations cost money, most smaller businesses shy away from frequent revaluations unless there is a sale.
HMG has put off revaluing the nation's housing stock for decades!

[m_kerr] 29/9/2023 12:46

part of the blame lies with management. probably £300m+ of property assets, but no external valuation, or indeed any valuation at all is done by the company, which private equity are easily able to do on their own. when asked how much it's worth, i remember the CEO said 'i have no idea'.

as with many CEOs, great at running the business, but very poor capital allocators.

[daneswooddynamo] 29/9/2023 10:17

No doubt about it but ultimately they are poorly valued by institutional investors