Vertu Motors Share Discussion Threads

[hard work] 09/3/2016 16:42

I actually thought the wording in the announcement was rather open to uncertainty. Wonder why they couldn't have delayed the trading update by a day to incorporate it all

[nehpets81] 09/3/2016 15:52

Perhaps not a scandal but the announcement of a placing just 24 hours after the latest update is really not good form. They clearly knew about the placing when that was released but only mentioned it as a possibility. What about the people who bought in after yesterday's announcement?

In any case, the board here clearly do not see a recession just around the corner with this amount of investment over the coming months.

[zoolook] 09/3/2016 14:53

I know it is the US but Warren Buffett has some interesting points on why he sees opportunity in dealership consolidation at the beginning of this interview:

[webclick99] 09/3/2016 14:38

I worry that the consolidation of car dealerships is not a good idea for the long term. Back in the early 2000's, estate agencies were doing the same thing. Come the recession, they couldn't offload branches quick enough and were being sold for next to nothing. Maybe estate agencies are a bad example, but that is what springs to mind.

I hope VTU has a strategy to cope with the next recession in 6 months or even 6 years, who knows, but I'm beginning to think this could be a short term investment.

[bigbertie] 09/3/2016 12:17

Ok - scandal was too strong a word, but generally the supposed rights of shareholders with regard to allotment of new shares are frequently over-ridden, in my view unfairly.

[cockerhoop] 09/3/2016 11:55

I read it as mortgaging a portion of the freeholds, they also say it will replace some of the existing banking facilities which I imagine is the £15m acquisition facility that is due to expire in Sept 16.

Edit The acquisition facility was renegotiated to £20m (extendable to £40m) after the last year end and now expires in 2019.

[ferries5] 09/3/2016 11:18

Obviously in a hurry complete the placing. All aquisitions to be completed between March And June.

Three near term acquisitions have already been identified by the Group with a combined consideration of approximately GBP26 million. Two of these planned acquisitions comprise both premium and volume dealerships and, if they complete, will augment existing franchises in key geographies and also add a new manufacturer partner. The third transaction comprises the acquisition of a freehold property and a long-leasehold property (both of which are currently occupied by the Group), and one of the two dealership acquisitions also includes a significant freehold portfolio

It is the second part of raise that concerns me more, does it mean that they are going to sell off some freehold property, or morgage it.

The Board considers that the introduction of property backed, fixed interest, long-term debt of up to GBP50 million would enhance shareholder returns, whilst maintaining the Group's strong and conservative balance sheet. This long-term debt, if executed, would replace an element of the Group's current debt facilities

[cockerhoop] 09/3/2016 10:52

On what valuation metric is VTU more highly rated than CAMB? The only one I can see is FWD PE and VTU have just said they're ahead so is out of date.

[alter ego] 09/3/2016 10:12

yes, an over reaction to call it a scandal. Company is clearly keen to move on and PI's have excellent opportunity to pick up extra shares if they want to. With respect to those who thought the share price undervalued VTU, it's the market that decides the value, not management. VTU is still more highly rated than CAMB so not that undervalued.

[zoolook] 09/3/2016 09:55

Clearly there is some urgency to do the acquisitions that has led to the haste. The last placing was just with Institutional Investors so no chage there. Shares available now at around the placing price for private shareholders. Not that much of a scandal really is it?. A scandal is Rob Terry and Quindell, or a bogus Chinese AIM listing . Given their track record (market conditions permitting) the money raised should be earnings enhancing in the medium/long term.

[bigbertie] 09/3/2016 09:10

I agree. This is a scandal - the shares have IMHO been clearly undervalued and the timing of the statement and placing show that the directors are taking advantage of the recent price improvement to hand the gain to institutions (and themselves of course) at the expense of existing shareholders. Of course they will have to ask permission at the agm but no doubt the vote will be carried by big institutions (although I haven't checked the big shareholders recently). How sad to see such callous treatment of small sharehlders. Just my opinion, but I shall not now be buying a car from them.

[qackers] 09/3/2016 09:03

The placing price is 62.5p. If you are patient you should be able to buy in the market close to or even below this price.

Not happy with wording in yesterdays RNS re timing of placing.

[mortimer7] 09/3/2016 08:49

I too find the speed in which this has occurred after yesterdays update slightly disconcerting & also that PI's are being excluded.
That said, I understand and agree the fund raise strategy as there is a "land grab" in the motor retail sector so VTU need these funds to act on acquisitions ASAP.
(Pendragon are acquisitive, Lookers recently bought Benfield & quote "consolidation opportunities in the sector" in todays results).

[toyin] 09/3/2016 07:51

18BT

Sold yesterday. I would get out until the dust settles. I find it slightly concerning that in the update they say they are considering options to raise capital and 24 hours later they have decided and everything is in place!

All the best

[18bt] 09/3/2016 07:19

Placing price is very wide - especially considering the fall in the share price after 10am yesterday. At that discount, shareholders should be given an opportunity to subscribe at the issue price

[cockerhoop] 08/3/2016 22:15

BB,

Personal Contract Purchase

[bigbertie] 08/3/2016 21:24

What does PCP stand for? Excuse my ignorance.

[mortimer7] 08/3/2016 09:07

"Trading ahead of expectations with record revenues and profits".
Comprehensively good performance on all the key metrics detailed in todays announcement. Aftersales is particularly impressive being the highest area of profit generation & of course this being fed by the continuing improvement in new car sales where they're outperforming the market.
Obviously the motor trade is cyclical and also within that the fortunes of each manufacturer as they replace models etc. But to counter these cycles: since the last downturn dealer groups such as VTU have swallowed up a large number of smaller dealers and secondly, the evolution of PCPs for buyers provides consistent revenue less likely to be as affected by wider economic fluctuation.

[ferries5] 08/3/2016 09:03

Muted response to a great update,. Think the mention of a possible equity raise + market sentiment has put a damper on it.

BMW would be ok, will give them the Mini or maybe a tie-up with a Chinese manufactuer

[ed 123] 08/3/2016 07:59

Looks to be going up, pre-market.

Will they pull back from acquisitions before the next downturn (whenever that comes)?

This is not one I hold. I was once a customer of theirs .... but never again!

[alter ego] 08/3/2016 07:28

New manufacturing partner? Would be nice to see BMW added.

[alter ego] 08/3/2016 07:20

Nikesh your p/e looks wrong

[hard work] 08/3/2016 07:19

Perhaps the most interesting para in the whole release. "...adding a new manufacturing partner..." any ideas?

The Board has identified a number of near term acquisitions comprising both premium and volume dealerships which would, if completed, augment existing franchises in key geographies and also add a new manufacturer partner. In order to finance such opportunities and the Group's on-going growth strategy, the Board is considering options to raise further capital for the Group, including a potential equity issue and a review of its borrowing facilities with a view to introducing property backed, fixed interest, long-term debt. Further announcements will be made as appropriate.

[nikesh] 08/3/2016 04:32

Market cap 240million
Profit before tax: 32million year
Freehold value: 126million (35p/share)
P/E: 3-3.5
Cash: 32 million @14th October 2015 (recently spent on acquisitions)
Above figures do not incorporate goodwill value!!!

=MASSIVELY UNDERVALUED or am I missing something?

[alter ego] 04/3/2016 09:56

trading statement due on Tuesday according to IC