Vertu Motors Share Discussion Threads

[otemple3] 02/8/2021 13:47

VTU mgmt team are always incredibly cautious / prudent. Can't see how we won't have multiple upgrades over the coming months as reality kicks in

[bigbertie] 02/8/2021 13:13

I see that Vertu is forecasting adjusted pbt of not less than £40m for 1H, and £40-45m for the full year. That implies a second half close to breakeven which seems unduly pessimistic, even given the headwinds.

By contrast Pendragon are expecting underlying pbt of £30m for 1H but £55-60m for the year. [The 2 oompanies have slightly different years, but both have the September sales period in 2H and both face similar headwinds.]

Is there something we don't know about Vertu or are Pendragon under-estimating the likely problems?

[davebowler] 29/7/2021 08:04

Zeus;
Another upgrade
Vertu has released an unscheduled trading update, delivering another earnings upgrade to 2022E, this time in excess of 30%. This is driven by the strength of the used car market, although we believe Vertu is outperforming particularly in terms of securing supply. We believe the shares remain significantly undervalued, and that it remains well placed in the sector.

§ Trading update: Vertu has released a further trading update, which leads to another earnings upgrade to the full year outlook. This follows a 15.5% EPS upgrade to 2022E EPS at last month’s AGM. Adjusted PBT for H1 2022E is not expected to be less than £40m, with revised guidance for the full year now at £40-45m vs. £28-32m previously. Confidence in the future prospects of the Group remain very high, which reflects our view that Vertu is very well positioned to capitalise on the changes and opportunities in the UK motor retail sector.

§ Key drivers: The key driver behind this ongoing level of outperformance is the used car market, which remains exceptional. This is particularly the case in terms of margin retention, which is having a material impact on Group profitability and cashflow. As we have flagged in our recent sector review, vehicle supply remains very tight which is aiding high residual values. Despite the supply constrained environment, Vertu has been able to maintain inventory and sales volumes at higher levels than previously anticipated, which should aid its ongoing market outperformance. Elsewhere, new vehicle volumes and margins have remained strong, while service revenues have strengthened due to the timing impact of annual services and MOTs delayed by the lockdown in the prior year.

§ Caution for H2: While it’s clear that Vertu is performing well and ahead of a robust market at present, there are some reasons to be cautious going into H2. A theme that has been widely discussed has been new vehicle supply, which is expected to intensify and potentially disrupt the key September new car market. In addition, this is likely to have a knock-on effect on used vehicle supply. Any further disruptions from COVID-19 also cannot be ruled out in terms of future restrictions and employee absence. There are also UK-wide labour shortages, and high vacancy rates are putting upward pressure on costs which also have to be managed going forward.

§ Forecast changes: Exhibit 1 summarises our forecast changes, which shows a 2022E EPS upgrade in excess of 30%. For 2023/24E we have also nudged up our assumptions, although mindful of supply constraints and cost inflation.

§ Valuation: This remains undemanding on 2023E EPS estimates, tangible net assets per share of 50.2p and our value per share in excess of 80.7p.

[ntv] 29/7/2021 07:57

Certainly looks good

[chrisb1103] 29/7/2021 07:39

Outstanding trading. Should be north of 50p this

[jaf111] 29/7/2021 07:12

No one following???

A second "above expectations" RNS in a month...previous upgraded range £28-32m now increased to no less than £40m.....

[tole] 21/7/2021 05:38

https://www.fool.co.uk/investing/2021/07/17/top-small-cap-stocks-for-july/Roland Head: Vertu MotorsCar dealership group Vertu Motors (LSE: VTU) is one of the UK's largest motor retailers, with brands including Bristol Street Motors. Vertu says that demand for used cars is "exceptional" at the moment. The latest update from the company revealed strong trading and triggered an upgrade to profit forecasts.The main risk flagged by the company is that the global chip shortage will cause delays to new car deliveries. However, Vertu's share price is covered by the value of the group's property portfolio, and the business currently trades on just seven times forecast earnings. Brokers are also forecasting a useful 3.6% dividend yield this year.In my view, Vertu looks like a good, cheap, small-cap stock. I recently added the shares to my portfolio.

[boonboon] 15/7/2021 20:01

https://www.google.com/amp/s/amp.ft.com/content/d0f4efec-d83c-47e1-b81f-7b57b729d76dChip shortages easing.

[dros1] 15/7/2021 12:08

FT today
New ventures focused on selling used cars online have struck deals to raise almost $6bn so far this year, as investors bet big that the last major category of consumer spending to escape ecommerce disruption will finally go digital.

Start-ups that barely existed before the pandemic and decades-old automotive trading groups alike are racing to build out the online marketplaces, consumer brands and costly logistics infrastructure needed to tap into a global used car market that is worth almost $1tn a year.

“The automotive space is lagging the online shift versus almost all other retail spaces, but it’s now playing catch-up,” said Alex Chesterman, founder and chief executive of UK-based Cazoo, which is forecasting revenues to grow by more than 300 per cent to almost $1bn this year.

Chesterman’s digital automotive retailer is set to go public through an $8bn deal with a US special purpose acquisition company this summer, generating proceeds of almost $1bn. Cazoo’s biggest UK competitor Cinch raised £1bn ($1.4bn) in new capital in May.


Cinch and Cazoo are just two of the largest examples of how much fuel is pouring into used-car sites around the world, from India to Mexico.

“It feels like the last major holdout in the shift to a digital economy,” said Tom Leathes, co-founder of Motorway, another UK automotive start-up. “It’s about time that this industry was disrupted and became more efficient. It’s been bad for consumers for decades.”

Companies across Europe, Latin America and Asia are looking to replicate the success of Arizona-based trailblazer Carvana, which was founded in 2012 and is now worth more than $50bn.

Carvana’s shares have more than doubled over the past 12 months, after growing annual revenues by 42 per cent in 2020. Yet its share of the fragmented US used-cars market is estimated at less than 1 per cent, which bulls see as showing huge growth potential.

Consumers have researched their next car purchase online for many years. But the transaction has usually been completed offline, even if it was arranged through a website such as Auto Trader. The pandemic’s lockdowns created fertile conditions to convince more car buyers to look online for the first time, as well as for dealers to shift their focus from the forecourt to the web.

“There’s been a seismic shift in the industry’s view of online business,” said Leathes, after Motorway raised $68m last month to build out its online marketplace, where dealers bid for privately owned cars. “In the past 12 months, all car dealers have had to become online car dealers.”


At the same time, the chip shortage triggered by Covid-19’s manufacturing disruption has cascaded through the global automotive supply chain. Constrained production of new cars has pushed up prices in the second-hand market, intensifying competition for used vehicles and becoming a key driver of rising inflation across developed economies.

Used cars were already a £480bn ($660bn) market across the UK and Europe in 2019, according to data cited by Cazoo in its investor presentation, far larger than ecommerce mainstays such as clothing or consumer electronics.

But going into the pandemic, less than 1 per cent of all used car sales were conducted online. By contrast, digital channels account for a third of clothing sales and half of electronics retail.

“Three years ago, it was a big call to get people to spend £20,000 on an ecommerce purchase,” said Will Turner, partner at tech investor Draper Esprit and a Cazoo investor.

To get car shoppers more comfortable with buying online, digital platforms such as Cazoo, Cinch and Europe’s Autohero have introduced Amazon-like features, such as no-quibble seven-day returns and delivery within a few days.

Chesterman predicts that within five to seven years, as much as 30 per cent of the used car market will have moved online. But unlocking this multibillion-dollar opportunity will require huge investment in acquiring inventory, building refurbishment centres and delivery infrastructure, and marketing.

“Fundamentally the challenge has always been it’s an operationally heavy, complex, expensive model to get off the ground,” said Rebecca Hunt, partner at Octopus Ventures, an investor in Cazoo. “There’s no getting away from that.”

For example, the costs of storing and delivering inventory — as well as handling returns — are far higher than in other categories of online retail because of the size and price of the asset.

“It’s clear that there is massive demand,” said Hunt, “but nobody had been able to deliver at scale.”

[tomps2] 14/7/2021 07:41

VTU investor presentation rearranged.
This event is now being held on August 17th at 4:30 pm

Robert Forrester, CEO & Karen Anderson, CFO will present, followed by Q&A.

Register here: hxxps://www.piworld.co.uk/events/

[boonboon] 13/7/2021 21:45

Same for the whole industry so shouldn't have too much of a long term affect as customers will either have to wait by a used car or keep and service their existing car. Margins should be high.They've currently got over 9,000 used cars on their books and of these over 1500 are reserved.This stock is constantly changing as well and they do seem to have a stable amount between 7,500 and 9,500 cars at any one time.

[essentialinvestor] 13/7/2021 21:25

Somewhat of a delayed share price reaction as VTU spelled this out very clearly.

[robertball] 13/7/2021 21:20

Lack of cars to sell. (Lead time for a van is 9Months)

[disc0dave45] 13/7/2021 15:12

Any reason for this drop?

[bigbertie] 13/7/2021 13:18

So it has! I just booked today after reading post 1798 which has the July 13 date.
Thanks for that. BB

[sf5] 13/7/2021 13:10

I thought the pi presentation has been postponed. To mid-August? Can't be sure as the email has gone walkabouts.

[bigbertie] 13/7/2021 11:03

I wonder why the share price is falling ahead of the presentation?
Recent results and expectations are all positive, apart from some concern
about possible delays in vehicle availability.
And I have just bought a new car from them!

[tomps2] 07/7/2021 12:12

Vertu Motors (VTU) investor presentation.

Robert Forrester, CEO & Karen Anderson, CFO will present, followed by Q&A.

This event is being held on July 13 at 4:30 pm

Register here:

[mortimer7] 05/7/2021 08:11

SMMT have released the figures for UK new car registrations for the month of June today. Total 186,128. June 2020 was 145,377. June 2019 was 223,421.

[tole] 24/6/2021 18:32

https://www.fool.co.uk/investing/2021/06/24/2-cheap-uk-shares-i-think-could-double-my-money/Driving growthLet's talk about Vertu Motors (LSE:VTU). It produced revenue of £2.5bn last year, and yet has a market cap of only £171m. It also just upgraded its profit forecast to £30m for 2021 thanks to an "exceptional used car market". Vertu operates a network of car dealerships across the country and added 30 new outlets over the past year and a half.A forward P/E of 7 makes these extremely cheap UK shares. Operating profit growth jumped 92% in the last 12 months. The shares are up about 50% in that time, but I think there's a lot further to go. Earnings are expected to jump another 24% next year and Vertu shares are slated for a tidy 3.3% dividend yield. P/FCF is just 2.9. Covid-19 remains a risk, and the global shortage of semiconductors could hurt new car production.

[davebowler] 23/6/2021 08:52

Zeus
Vertu delivered an upgrade in its latest AGM update just four months into its financial year. We have increased by 2022E EPS forecasts by 15.5% taking the mid-point of revised management guidance. We are maintaining our 2023-24E forecasts for now. We remain comfortable with our investment thesis.

§ AGM trading update: In an AGM trading update, Vertu has confirmed that strong trading conditions witnessed in March and April have continued to date. This is likely to lead to a very strong H1 performance, albeit we exercise some caution that supply constraints and ongoing COVID-19 disruptions could impact the key trading period of September and therefore H2 performance.

§ Key trading themes: Vehicle supply challenges reflecting component shortages are becoming increasingly apparent, with the lead time between order and delivery of new cars increasing. The demand for used cars remains very strong, albeit supply issues in new cars also causing an increasing reduction in supply of used cars. This has caused exceptional levels of used car price inflation, which has been widely publicised across a number of data sources (CAP HPI hxxps://www.cap-hpi.com/blog/view/new-blog-post-1098).

§ Forecast assumptions: We are upgrading our 2022E EPS forecasts by 15.5% as we take our adjusted PBT forecast from £26.0m to £30.0m being the mid-point of revised management guidance of £28-32m. Our revenue assumptions increase by 8.1% to take account of the rising capital cost of the vehicles particularly in used cars. We have assumed a 10bps improvement in gross margins too to reflect current activity levels in used cars. We are maintaining our 2023E and 2024E forecast assumptions for now as we are mindful of the increasing supply constraints and removal of business tax relief that could significantly impact September trading and its H2 performance for Vertu and indeed the rest of the industry. While we are just four months into the H1 period for Vertu, we would anticipate the H1/H2 split to be significantly ahead of the normalised c70/30% PBT split this year.

§ Valuation: The solid balance sheet of Vertu continues to underpin the current share price with tangible net assets per share of 50.2p as at 28 February 2021 and is expected to grow to 87.9p by 2024E. We remain comfortable with a valuation of in excess of 75p implied by our DCF, and SOTP models, which is also underpinned by an average mid cycle P/E of 12x applied to prior peak earnings. Looking further out, we think Vertu can deliver EPS closer to 8.5p in the next cycle and on a P/E of 12x would provide a long-term share price target of 102p. At current levels, we continue to see strong long-term upside, with the average of our valuation techniques implying a value of 77.1p per share, or 68% upside versus current share price.

[daneswooddynamo] 23/6/2021 07:48

Great update but the chip problem is beginning to cause supply problems. Great for used profitability but still an issue. Could hold the price back a bit imo so have knocked a few cheap ones out

[techno20] 23/6/2021 07:37

Great update. Both Zeus and Liberian upgrading forecasts this morning. TP’s at 77p and 80p. This is seriously good value, so expecting continued steady progress upwards as the quality of Vertu gets recognised.

[boonboon] 23/6/2021 07:21

Good update today.