Vertu Motors Share Discussion Threads

[mortimer7] 13/2/2018 08:55

One of the reasons listed motor retailers will have a decent buffer in their Aftersales profits for a few years (to offset downturn in new vehicle market)....
The main determinant of the aftersales market is the number of vehicles on the road, known as the 'car parc'. The car parc in the UK has risen to over 34 million vehicles in 2017, a rise of 1.6% on the prior year.
The demand for servicing and repair activity is less impacted than other sectors by adverse economic conditions, as motor vehicles require regular maintenance and repair for safety, economy and performance reasons.
Overall, we expect at least for the next three years to see good continuing growth in the car parc, with higher growth expected in vehicles over four years of age.

[mortimer7] 05/2/2018 09:07

The UK new car market declined in the first month of the year, according to figures released today by the SMMT. 163,615 cars were driven off forecourts in January, a 6.3% fall compared with the same month in 2017 when 174,564 were registered.

[zoolook] 29/1/2018 16:02

He's looking forward to 2023

[woodwards26] 28/1/2018 22:31

I can't remember vertu at 1/4 of any recent price

[lullabite] 25/1/2018 23:06

Check out Alex bossert long thesis of Cambria

[lullabite] 25/1/2018 23:05

I hace positions un vertu And Cambria both 4 baggers in 5 years

[r ball] 25/1/2018 21:44

So why has the share price dropped?

[r ball] 25/1/2018 21:43

I don't think the share is really bothered by the fact that it's owner is a long term or a short term holder. Share buybacks can enhance mgt bonuses by increasing Eps for minimal effort. Special dividends force the business to use remaining cash wisely.

[ferries5] 25/1/2018 21:05

R Ball
Disagree about buyback policy over a special dividend,
A special dividend attracts short term holders. where a buyback ,rewards and supports long term holders

[r ball] 25/1/2018 17:17

I'm not. My only interest is: I had a holding in Vardy, it's a local company and I know a couple of employees. The market just doesn't like these companies any more. The contrast with Vardy is astounding. After all the share price hasn't moved in 3 years. Given today's profit warning the share buyback policy looks ill judged. A special dividend would have been a better way to return cash.

[mortimer7] 25/1/2018 15:07

Got Cash. Generating Cash. Very little debt. Profitable, & GP sensitivity analysis indicates headroom/cushion to cover downturn. Dividends sustainable.
So disagree with value trap.

[alter ego] 25/1/2018 12:28

So, R Ball at what price are you hoping to buy some?

[r ball] 25/1/2018 12:10

Value trap.

[mortimer7] 25/1/2018 10:20

There's no doubting the sector headwinds in place at the moment & the year on year comparatives for Q1 will look dire. However, Vertu's tangible NAV is around 40pps, just below current share price & many of their recently acquired dealerships will not yet have achieved their profit potential.

[r ball] 25/1/2018 08:17

Still not a buy. Avoid

[mortimer7] 11/1/2018 09:02

Good point made in Marshalls RNS today. When comparing Q1 2018 new car regns to last year...
"During the first quarter of 2017, the market benefitted from the impact of one-off changes to vehicle excise duties which led to some consumers accelerating purchase decisions to avoid higher excise duties and this will not be repeated in the first quarter of 2018".

So I suspect the year on year comparisons, particularly in March 2018 are going to look quite grim for the sector.

[ferries5] 09/1/2018 09:40

Goverment needs to give guidance. People are not sure what to buy

[r ball] 07/1/2018 15:55

Must add that regulatory environment is sapping confidence and the consumer has somewhat turned against cars..

[r ball] 07/1/2018 15:36

No companies in this sector are a buy. It's all a bit toxic like pubcos. The PE is cheap but it's a value trap. Arguably we need some normalisation. Given that UK cars are on average 2-3 years younger than European ones this will give you an indication of the potential drop off in sales should PCP and consumer buying falter. I.e. 3 years equivalent of no sales. Obviously sales wouldn't drop to zero but this is the size of the overhang.

[lullabite] 06/1/2018 02:26

I agree but What do you think about the Aftersales Business? Do you think its possible that the customers swtich to specialized companies in Aftersales like repair companies or autopart dealers ? Also What are your thoughts on Cambria automobile?

[karadas09] 05/1/2018 21:10

@ r_ball My holding in VTU is all part of a balanced portfolio of stocks which includes banks and non UK companies. My only other UK consumer facing share is DC. which I picked up at recent lows.

[r ball] 05/1/2018 20:06

I disagree. The risks are too great. I would avoid any exposure to consumer in the U.K. the banks are looking good value though....

[karadas09] 05/1/2018 16:39

@lullabite. I have been on board here since the low 40's last year. Clearly the current market conditions show a reverse for car sales, so the share price is going to be kept under pressure for a few months at least. However, Vertu have been consistently increasing their market share since 2006 and specialise in buying up distressed dealerships and turning them round. They have demonstrated a track record in extracting good value from these deals for shareholders, and challenging market conditions might present more of these opportunities. The management team are strong and have invested in analytics tech that puts them ahead of some old school competitors. Vertu also make the highest profit margin in after sales which gives them a significant hedge against falling new car sales.
The longer term picture over 10-20 years regarding electric vehicles (which require less maintenance) and different ownership models does create some uncertainty for me, but I don't see this as an immediate threat. I think trading below book value and with a decent divi, this should be a good 3-5 year hold and then see what the future holds.

[r ball] 05/1/2018 10:48

The market has changed a lot since the Vardy days.

[grahamburn] 05/1/2018 10:38

Don't quite get your connection, lullabite, as I'd hardly call the rangebound share price "interesting"!

IMO, unlike its immediate competitors, Vertu has much more potential upside (and, therefore, less downside) risk due to its business model. Its strength in used cars and aftersales policies does provide a degree of protection in the inevitable downturn.