Vertu Motors Share Discussion Threads

[walbrock82] 16/8/2017 10:03

On car dealerships, here are a few things to keep in mind:

1. Operating margins are razor-thin (typically 1%-2%), therefore a 1% drop can reduce profits by 50%.
2. This is one reason the car dealers buying all these franchises, which is to contain a sudden drop in earnings.
3. Keep an eye on inventory level because cars lose 15%-30% of their value in one year. For both Vertu and Lookers, their inventory period is around 80 days.
4. The good news is car dealership has huge property backing, so dispose of subsidiaries will raise a lot of cash, when borrowing tighten.
5. Both Lookers and Vertu, the more post-tax earnings produced, the more negative the free cash flow gets generated. Here is Lookers table:
6. However, positive free cash flow is possible if capex + acquisition is at 2 times depreciation, but not at the current 5 to 6 times level.

For a more board assessment, click

[zoolook] 05/8/2017 10:38

Depends on your outlook. Given it is priced only just above NTAV and has a respectable yield and appears very well managed makes a good case for a long term buy. No guarantees though

[pugugly] 04/8/2017 14:59

News now on BBC news -
UK car sales fall 9.3% in July says motor trade body


Ties is going to be tough for all in the business - Time to put on the back burner ??

[mortimer7] 04/8/2017 08:13

The SMMT figures for UK new car registrations for the month of July have been issued this morning. Registrations are down 9.3% year on year at 161,997, back to levels last seen in July 2013.
Diesel regns were down 20.1%, Alt. Fuels vehicles up 64.9%, Petrol down 3%.

So looks like Used vehicles & Aftersales focus is going to be key for Motor retailers for a while. Not such a big problem IMO, given the vehicle parc that has been built up over recent years & the fruits of the acquisitions made come to bear..

SMMT CEO Commented "While it’s encouraging to see record achievements for alternatively fuelled vehicles, consumers considering other fuel types will have undoubtedly been affected by the uncertainty surrounding the government’s clean air plans. It is important to remember that there are no plans to charge drivers using the latest Euro 6 models and no proposed bans for conventional petrol and diesel vehicles for some 23 years. The lower demand in recent months will inevitably mean competition from manufacturers will intensify and it will be a good opportunity for consumers to get a great deal on their next car, with many exciting new models launched in the coming months".

[tonybaloni] 04/8/2017 07:10

Why buy back less when they are a lower price ? Surely they should have bought as much as possible at these lows ? Or am I missing something.

[mortimer7] 01/8/2017 10:33

Love that idea...

[pugugly] 31/7/2017 11:56

Well worth a listen when you have an hour spare. Implications on the future af motor traders, service units, and second hand car sales are very depressing - even if the man is only half right.


Any thoughts/comments appreciated. but DYOR as always

[kazoom] 26/7/2017 18:33

See box 7.

Sold down from 6.19% to less than 5%. That one seems quite straightforward

[eggbaconandbubble] 26/7/2017 18:17

Can someone please decipher what Blackrock have actually done! See RNS

[gswredland] 26/7/2017 15:50

Mmmm. 'ACCORDINGLY at this stage' We will see further down the line

[gswredland] 26/7/2017 15:49

Mmmm. 'ACCORDINGLY at this stage' We will see further down the line

[danieldruff2] 26/7/2017 08:45

And a share buyback. Continue to think this one is 50% undervalued

[mortimer7] 26/7/2017 08:07

"Though market conditions have softened, I am pleased to confirm that your Company remains well positioned both operationally and financially. Accordingly, at this stage, the Board expects the Group's trading performance for the year ending 28 February 2018 to be in line with market expectations"

[pugugly] 26/7/2017 06:25

Softening in market confirmed by AGM statement -


Question unanswered as to how long this will continue - Reading between the lines company is belt tightening and preparing for continuationespecially until clarity over Brexit - or otherwise !!!!

[mortimer7] 05/7/2017 08:22

Gross profit from Feb 2017 y/e accounts:
Aftersales £123.4m 39.4%
Used Vehs £100.7m 32.1%
New Vehs £ 89.4m 28.5%
Total £313.5m 100%

By way of illustration that new vehicles is the 3rd highest revenue stream & subject to too much focus in terms of Motor retail Co's share price in my opinion.

[mortimer7] 05/7/2017 08:06

Figures are out from SMMT this morning for new car registrations in June.
Total 243,454, which as expected by the market is a decrease of 4.8% compared to June 2016.
However, the 6 months to June total still represents the 2nd highest half year total ever recorded.

[r ball] 02/7/2017 21:30

Blew co: ever sell is a buy anyway. Volume is a useful indicator. Anyway I would avoid VTU. As ppi fades away then car volumes may fall further...

[blewco] 30/6/2017 11:33

Sells 734,000, Buys 190,000 and the price goes up? Is someone hoovering these up?

[mortimer7] 22/6/2017 13:23

IMO this is now looking stupidly cheap, all the worst scenarios from macroeconomic circumstances (eg Brexit deal) seem to have been factored in to the share price by the market.

This extract is from from the results in May:

"The Group has an ungeared balance sheet with shareholders' funds of £246.4m (2016: £197.9m), representing net assets per share of 62.3p (2016: 58.0p) as at 28 February 2017. The Group has tangible net assets of £156.1m (2016: £130.6m) and the balance sheet is underpinned by a freehold and long leasehold property portfolio of £182.0m (2016: £137.7m)"

So tangible net asset values around 40pps.

[danieldruff2] 15/6/2017 08:21

Some of these stocks are already bashed down because of such fears and when they materialise they get a double bash and fall to silly valuations. That's what happened to DFS this morning so I bought some on the drop. Ideal buying opportunity. Don't think we'll see as big an opportunity here - I wouldn't place cars and furniture together.

[pugugly] 15/6/2017 08:07

From the DFS trading update this morning -

Chances of a read across to VTU car sales both new and pre-used HIGH (imo)

"In our half year results announcement on 30 March 2017, we highlighted the expectation of a softer market environment in the second half of our financial year. The trading environment has however recently weakened beyond our expectation, with significant declines in store footfall leading to a material reduction in customer orders. We believe these demand effects are market-wide, in line with industry indicators, and are linked to customer uncertainty regarding the general election and the uncertain macroeconomic environment."

[mortimer7] 05/6/2017 08:07

The anticipated dip in new car registrations was confirmed for the month of May this morning as SMMT figures show a drop compared to May 2016:-
"UK new car demand falls -8.5% in the month as buyers hold back ahead of June general election, with 186,265 cars registered"

[ferries5] 14/5/2017 07:03

Vertu launches online used car sales platform





Somewhat glitchy, needs refining but it looks good !!

[cockerhoop] 10/5/2017 22:20

EC,

Agree with regards to the profit margin CAMB is certainly higher (I imagine that reflects the higher proportion of luxury/premium franchises they hold).

I'm not sure ROE is a great metric to compare car dealers with as CAMB's higher figure reflects it's somewhat weaker balance sheet.

CAMB ROE will I think trend down as they have some major freehold investments to make at their Land Rover dealerships in the next couple of years.

CAMB's P/E a little higher and dividend less than half. Agree a lot to like about both companies.