Vertu Motors Share Discussion Threads

[johndoe23] 13/12/2021 19:41

Robbie Burns aka Naked Trader has bought in here...

[microscope] 13/12/2021 07:16

Two more Toyota outlets acquired this morning.

[fredfishcake] 10/12/2021 11:49

From the interim results:
"· Whilst vehicle sales tend to grab the headlines, the Group's high margin aftersales business is a major contributor to overall profitability."

I believe that a decent slug of profitability comes from servicing. With fewer new cars on the road, the overall fleet is aging, so you'd think it would require more/more complex repairs and servicing. My guess would be that this is also in VTU's favour.

[microscope] 10/12/2021 09:38

Hopefully they'll resume the buyback and 70p will soon be left behind.

[davebowler] 09/12/2021 09:10

Liberum-
Vertu has issued an update as a result of stronger than expected trading in October and November. Supply shortages for new and used cars persist, but have not been as acute as expected. Demand remains strong and margins continue to be above normal levels. Management is now guiding to FY22E PBT of no less than £70m (previously £65m). We increase our forecast to reflect this, but make no change to FY23E. A CY23E PE of 8.8x remains cheap. Maintain 90p TP and Buy.

[davebowler] 09/12/2021 09:04

Zeus-
Further earnings upgrade
Vertu has released a trading update increasing FY22 underlying PBT guidance to “no less than £70m”, up from prior guidance of “at least £65m”. This was driven by new vehicle supply being better than expected in October and November, sold at enhanced margins, and a continuation of above-normal used car margins. We increase our FY22 forecasts by 7.7% to £70.2m to reflect this. Our profit forecasts for FY23 and FY24 are unchanged, but even at the more normal levels of forecast FY23 profit, we see ratings upside for Vertu. Recent bid activity in the sector highlights the current industry undervaluation and supports our intrinsic value estimate of 85.9p per share, a 25% upside to current levels.

§ Trading update: Vertu’s positive trading update has indicated that underlying PBT in the year to 28 February 2022 will be “no less than £70m”. Whilst there has been continued disruption to new and used vehicle supply, the supply of new vehicles was better than envisaged in October and November, and was sold at enhanced margins. Despite some recent normalisation in used car prices, Vertu has also retained above-normal used margins. The Group has made progress in responding to the UK-wide labour shortages, having rolled out their enhanced reward packages and reduced the number of live vacancies, albeit these remain above historic levels.

§ Forecasts: We have upgraded our forecasts in line with Management’s guidance, increasing FY22 PBT by 7.7% to £70.2m. We have increased our assumptions for new unit sales, average new selling price, and GPPU for new and used vehicles. Our FY23 and FY24 forecasts remain unchanged at this stage, except for the flow-through impact of higher net cash at the end of FY22 and the positive EPS impact of share buybacks. We think it is likely that strong vehicle margins will extend into FY23 but we are mindful of cost inflation offsetting this.

§ Sector consolidation: Last month Constellation Automotive made a 400p per share cash offer for Marshall Motor Holdings (MMH), supported by an irrevocable undertaking to accept by the 64.4% shareholder Marshall of Cambridge Holdings. The MMH board has announced its intention to recommend shareholders accept this offer. This was a 42.8% premium to the closing price on 26 November and represents 17.7x FY19 (pre-pandemic) earnings and 16.3x FY22 consensus adjusted EPS. Further sector consolidation cannot be ruled out and we believe the sector remains significantly undervalued.

§ Investment view: Vertu now trades on a P/E of 4.7x FY22 and 10.9x FY23. This is below the mid-cycle average of 12.1x we have discussed in prior notes and below the MMH FY2 takeover multiple. At 16.3x FY23 EPS, Vertu would be valued at 101p per share. This more than supports our prior intrinsic value estimate of 85.9p, which did not include the potential upside from deploying £90m of M&A firepower.

[chrisb1103] 09/12/2021 07:14

And the rest :)Considering the robust trading performance delivered for the year to date, the Board now anticipates that the Group's adjusted profit before tax for the year ending 28 February 2022 will be no less than GBP70m (previously not less than GBP65.0m).

[purplepelmets] 09/12/2021 07:01

as expected! :)


Trading Update

Further upgrade of expected trading performance for FY22

The Group is providing an update on recent trading activity and a further
upgrade to the full year outlook.

Group profitability in October and November 2021 continued to be delivered in
excess of its business plan and also prior year levels. Shortfalls in the
supply of both new and used vehicles in the UK have continued due to the
ongoing dislocation in supply chains impacting global vehicle production.
Nevertheless, new vehicle supply to the Group in October and November was
better than envisaged and was sold at enhanced margins. Customer demand has
remained positive, with strong future order banks in all new vehicle channels
being evident. Used vehicle supply constraints continued to underpin vehicle
values, which have now plateaued and are starting to follow more normalised
seasonal trends. This, together with the application of robust pricing
disciplines in the Group, led to above normal margins being retained in used
cars.

[jimmywilson612] 07/12/2021 17:19

You know its a good market for 2nd hand car dealers when 2nd hand cars are appreciating in value, not depreciating.

Delighted with management hoovering up shares here - increasing EPS with excess cash.

[cb7] 07/12/2021 13:54

Firstly, if it was a nil sum game, car dealers wouldnt be making bumper profits - which they all are. Secondly, increasing new car production in 2022 will be gradual and spread over many months, probably the whole year and possibly longer.

[woodwards26] 07/12/2021 13:04

Bumper retail prices also means bumper trade prices they have to pay for used stocks. So a nil sum game.Problems will come within used car stocks when new car supply improves and a fairly sudden drop in value of stock held.I would guess the earliest time for this will be next May onwards . The sales managers skills in cleansing stock quickly will then be tested those that introduce a 30 ish day policy from early next year will be hit the least.But of course this will coincide with a big spike in new car orders coming through being both pipeline and new orders at the same time.So will firstly be lots of good news to lift the share prices across the sector. All just my own opinion as a retired motor traderI think sell before May and keep watching will be my strategy .

[wad collector] 07/12/2021 12:09

If there is going to be a more sluggish recovery in new car production than was anticipated ,as there seem quite a few problems globally which will delay the production lines, this will keep the share price rolling up . The bumper second hand prices look like they are going to be sustained for a while which must be good for Vertu , even if it is only temporary.

[microscope] 07/12/2021 10:03

Far be it from me to suggest there's a leaky ship, but we seem to be powering ahead this morning!

[microscope] 07/12/2021 09:06

Yeah was a trading update on 7th December last year. So am expecting any day now.

[podgyted] 05/12/2021 12:01

Looks like the market is expecting another positive TU in the coming week.

Pendragon:-

7/10/21 Profit £57.5m -> £70m
1/12/21 Profit £70m -> £80m

Vertu

13/10/21 Profit £52.5m -> £65m
Next week ??? Profit £65m -> £75m ????

Notice they paused the BB on 30/11/21.

Just a thought.

[microscope] 03/12/2021 10:55

I make it they've bought back about 1.6 million shares since the most recent buyback announcement, at average of approx 62-63p.

So they've spent about 1 million of the 3 million (less expenses) available.

Still a long way to go then, which should imho be good news for the share price!

[chrisb1103] 03/12/2021 08:25

Would like to see this take the next leg up from here 70+ has surely got to be in sights!

[effortless cool] 01/12/2021 13:29

I added 60k shares (showing as a sell) earlier today. This is a very interesting sector at the moment, both in terms of transactions and performance and, whilst they are currently making tons of money selling used cars, pent up demand for new cars must be building up. I don't expect profits to more than half (as per current market consensus) between 2021/22 and 2022/23.

Further, the share buybacks are an excellent way to build shareholder value from surplus cash in the meantime.

[wad collector] 30/11/2021 20:35

It was a bit unusual , given that one holder had 64% of the stock , so they effectively had control of the company. Still , raises the sector profile.
Vertu next at £1 a share? Not that I want to start a bid rumour of course...

[1nf3rn0] 29/11/2021 11:32

MMH takeover offer announced today at 41% premium to pre-offer period close.Should help revive the rest of the sector after being unloved for a number of years.

[wad collector] 29/11/2021 09:50

Yes can't do the share price any harm.

[daneswooddynamo] 26/11/2021 17:20

Interesting moves at Marshalls perhaps with main shareholder wanting to up sticks and Constellation sniffing around, should see the sector moving up

[che] 18/11/2021 10:16

https://www.am-online.com/news/market-insight/2021/11/18/average-car-dealer-saw-1897-profit-rise-in-september-ase-reports

[finkie] 16/11/2021 11:54

continues to nudge up a slow market reaction to a sound company, should be 80p as value underpinned by tangible freehold property.