Vertu Motors Share Discussion Threads

[grahamburn] 18/6/2021 13:38

Probably due to Inchcape's statement

[purplepelmets] 18/6/2021 07:07

interesting spike up this fine morn

[grahamburn] 11/6/2021 11:30

The usuaal March/April cycle of more MoTs in March/April has probably been disrupted a little by the 6 month extension for those due in March to end July 2020

[gutterhead] 11/6/2021 10:02

More working days for after sales in March and April compared to Feb so that comparison not valid

You also have more annual services and MOT in March and April and previous "new plate" vehicles require anniversary services

Showrooms were closed in April 2020 so an increase over virtually nil is no big deal....

Finally, registrations are immaterial, its all about Retail sales and Margin

If you're going to use stats......

[boonboon] 11/6/2021 06:32

Wholesale and retail trade, and repair of motor vehicles and motorcyclesThis sector grew by 8.9% between March 2021 and April 2021, and output was 4.4% higher than its February 2020 level.The biggest contributor to the increase in the output of the wholesale and retail sector was the wholesale and retail trade and repair of motor vehicles industry, which saw growth of 27.0%. The growth is largely a result of the reopening of car showrooms. While new car registrations were 12.9% below the April decade average, over thirty times as many cars were sold in April 2021 than in April 2020 with electric vehicles taking a significantly higher market share

[daneswooddynamo] 08/6/2021 11:08

Of course. The used car profitability will be going very nicely indeed

[andywillz] 08/6/2021 10:43

Paul Scott was one of the reasons I picked up this share. He generally does a good job picking out decent companies.

However, I was listening to a US podcast with Dave Ramsey and they were discussing how the NEW car market is suffering because of the shortage of superconducters (ands other parts) because of the pandemic impacting production.

This has forced new car buyers in to the used car market, and they're now struggling to keep up with the demand.

Appreciate this is over in the US but I suspect the car markets in the UK will be reacting in the similar way - 2nd hand car prices going up!

[gutterhead] 04/6/2021 09:25

May 2019 was poor as Brexit uncertainty was killing the market. It was propped up with pre reg cars.
It’s all about margin, driven by short supply and most manufacturers removing ridiculously high volume targets.

[mortimer7] 04/6/2021 08:25

SMMT have announced the total number for New Car registrations in the UK for the month of May as 156,737. May 2020 was 20,247 and May 2019 183,724.

[purplepelmets] 03/6/2021 11:02

I will listen to anything Paul Scott says. Would bet good money as a PI he outperforms the likes of Terry Smith, Nick Train and Wazza Buffett. Just a fantastic ability to read a companies balance sheet and cut through the BS and waffle to discover hidden gold or otherwise. Off to watch now, TY

[tomps2] 03/6/2021 07:58

Paul Scott mentions Vertu Motors (VTU) at 9m50s in the latest piworld Interview.

Watch the video here:

Or listen to the podcast here:

[mm84] 26/5/2021 17:20

Thanks Wood. Does anyone know what the Consignment liability is for Vertu?

The company puts it all inside Trade Payables. Vertu states the amount of inventory that is "interest bearing consignment stock" but not the amount that is still "interest free".

Should we assume that the rest of the NEW vehicles are on consignment (not yet bearing interest) and that the liability is equal to those 2 together?

Also, what's the "other payables" under "Trade Payables". The company stated "Other payables comprise non-interest bearing advance payments from the Group’s finance company partners."

Thoughts?

[woodwards26] 26/5/2021 07:35

Technically yes you would add them together - but if the music stopped the interest bearing stock would need to be paid for and generally because it's ageing stock won't be worth what's owed on it ( NB some manufacturers also expect a 20 % deposit once it goes interest bearing)But again if the music stopped the non interést bearing would simply go back to the manufacturer.Many Many years ago some dealers would set up consignment stock at £1 and just change it when they became fully paid. But then there was a lot of movement of stock between dealers.However it is viewed the important thing is do the local management have a handle on stock ageing to minimise stock becoming interest bearing or fully paid .

[mm84] 25/5/2021 15:01

Vertu may never have to buy those vehicles, but it's paying interest on some of them (£3.6M in FY20), so if one chooses to account for it as debt, you can't really blame them.

Still on the same subject, all other peers disclose their Consignment liabilities pretty clearly. Vertu doesn't. What Vertu does is to separate the "Interest bearing consignment stock" + "Stock invoiced not yet paid held by Manufacturers to the order of the Group" in their Inventories section.

I'm not really sure if I should be adding these 2 together to get to the Consignment liabilities. Anyone has any thoughts about this?

[gutterhead] 19/5/2021 21:10

It’s a potential liability.
They will have free stocking, normally for 90 days, then start paying interest for another 180 days, then will have to buy the unit.
Ordering the right models and then “dressing̶1; each car in the right colour, spec etc is an art and the good dealers never end up having to buy stock.
It’s not a debt.

[mm84] 19/5/2021 20:35

Indeed, it's not an simple problem. After holding on to those cars for some time the company will start paying interest sooo.... maybe it should be counted as debt. One way to look at it is to count it as debt and net back the inventory.

[gutterhead] 19/5/2021 17:59

Just email Robert forrester and ask

[gutterhead] 19/5/2021 17:58

The manufacturers supply funding for stocking cars.
It’s not debt

[mm84] 19/5/2021 17:01

You mention that the company has net debt of £5-10M. Are you not including the funding from the OEM's?

Cambria discloses how much this is. Doesn't Vertu?

Does anyone have any clue to where I can find this?

[ntv] 12/5/2021 15:52

Happy to hold at the moment with a good start to the new year

[davebowler] 12/5/2021 08:01

Zeus;
Built on strong foundations
Vertu has released an impressive set of FY results, which are ahead of our previously upgraded forecasts. Trading momentum remains strong with pent-up demand still evident, and with healthy cash generation and a strong balance sheet we believe Vertu is well positioned. This note focuses on the scaled business (#9 in Europe) that has been built up from nothing 15 years ago, and we increase our near term intrinsic value from 62.9p to 75.6p per share implying a healthy risk/reward profile from current levels.

§ FY21 results: Vertu has delivered a very strong set of results for FY21, outperforming our latest adjusted PBT forecasts by 7%. This represents a 37% outperformance vs. the forecasts we released in October 2020. Vertu has generated significant cash throughout FY21, improving the net debt position from £28.3m in FY20 to £4.5m at the end of FY21.

§ Outlook: Vertu’s outlook is confident, with trading profits at a record level in the two months to April 2021. Adjusted PBT in the two months is running at £19.2m vs. £14.8m in 2019. We are mindful of current supply constraints, which could intensify during the course of the year.

§ New forecasts: As a result of Vertu’s strong performance, we have upgraded our forecasts for the Group. We now expect revenue to increase to £3.2bn in FY22, a 7.1% upgrade on our prior forecasts. We forecast this to result in underlying PBT of £26.0m in FY22. In our view, revenue and profits will continue to grow through to FY24. However, we expect the increase in the headline corporation tax rate in the UK (effective 1 April 2023) will cause a slight dip in FY24 EPS. Through this stronger performance and positive FCF generation, we think net cash (excluding leases) will be £2.4m by the end of FY22, increasing to £13.0m by FY24. This will allow Vertu to reinstate its dividend, which we expect will happen in FY22 at c.1.6p per share.

§ Valuation: As ever, the solid balance sheet of Vertu underpins the share price, with tangible net assets per share of 50.2p as at 28 February 2021. We see this as a floor for the share price, with other valuation methods providing upside. Our updated DCF gives a valuation of 75.8p. Our SOTP valuation, which separately values the EBIT Vertu generates and its property portfolio, gives a 98.5p per share value estimate. Finally, we have reviewed Vertu’s long-run P/E ratio, which provides a valuation of 78.0p when applying a mid-cycle P/E of 12.0x to prior peak earnings. Considering the possibility of Vertu further growing its EPS through acquisitions, we think a blue-sky target for EPS of 8.5p is achievable. At 12.0x P/E, this provides a long-term share price target of 102p.

[techno20] 12/5/2021 07:50

Two broker reports out this morning, both increasing share price target, Zeus to 75p, Liberum to 80p.

Topped up. GLA

[daneswooddynamo] 12/5/2021 07:35

The dealers have very good momentum coming out of COVID and I expect that to continue for the rest of the year. The shares have of course already doubled effectively from the lows but no reason why they cannot move back to the 55/60p level over the next 12 months imo

[techno20] 12/5/2021 07:23

Disappointing reaction to a stonking set of results. Value will out here as realisation of the scale of pent up demand and strength of the digital offering grows.