Vertu Motors Share Discussion Threads

[mortimer7] 04/8/2022 10:13

This morning, SMMT issued the total for the number of new cars registered in the UK for July: 112,162 down 9% on July 2021 total of 123,296.

[jaf111] 22/7/2022 10:45

Thanks for posting davebowler.....I do find sector-wide research so much more useful rather than the individual company stuff.......

My only comment on the report would be the absence of any mention of further corporate action.....certainly PDG is a sitting duck and LOOK must be on alert too. No idea why VTU is the "ugly duckling"

Either way I certainly agree that the sector is (very) undervalued!!!

[davebowler] 22/7/2022 09:58

Zeus-


Automotive Retail sector analysis



As we pass the half point of the year, we take a temperature check of the UK Automotive Retail sector, looking at the key themes and how these impact the PLC dealers. The sector showed exceptional resilience and flexibility in the pandemic, followed by very strong trading in 2021. We expect that dealers will once again prove resilient to supply constraints and macro uncertainties.



¨ New car supply shortages remain acute and will persist into 2023: Ongoing component shortages, compounded by the war in Ukraine and fresh Covid-19 shutdowns in Asia, have hampered production so far this year. UK new car registrations in the six months to June 2022 were down 11.9% YoY and 35.5% below the 2010-19 average. The aggregate 2022 global car sales consensus forecasts for eight OEMs (Toyota, VW Group, Ford, Stellantis, Renault, BMW, Mercedes-Benz, General Motors) has declined from 46m in October 2021 to c. 40m. New car supply should improve in H2, according to recent statements from OEMs, as semiconductor manufacturing ramps up, Covid restrictions are lifted in China, and parts previously made in Ukraine are sourced from elsewhere. Nevertheless, even if supply issues for components were resolved overnight, the lost output will take significant time to recover. We expect OEMs to continue to prioritise high margin models and sales channels (retail instead of fleet), which should support dealer gross margins on new vehicles for much of the rest of the year.

¨ Used car residual values are returning to normal monthly declines but are still supported by low supply: The latest Cap HPI data on average values of 3-year old, 60k-mile cars showed a 0.9% drop in June after a 2.1% decline in both March and April and a 0.7% drop in May. We see this as a return to normal vehicle depreciation patterns, albeit June’s 0.9% decline was still less than the June norm of 1.4%. The downturn in new car sales and a lack of fleet returns is restricting supply in the used car market, particularly in the nearly-new cohort. We expect this low supply to provide support to residual values, even as demand weakens. Recent trading updates from Vertu, Lookers and Pendragon have reported a continuation of last year’s high gross profit per unit on used vehicles.

¨ The UK consumer is under an intense spending squeeze which is expected to worsen: CPI inflation hit 9.4% in June, driven by energy, food and fuel, and is expected to exceed 11% this year. This inflation, coupled with rises in interest rates and National Insurance, caused the largest recorded YoY decline in average weekly disposable income in May (-17.6%), according to the Asda Income Tracker. In light of the cost of living crisis, GfK’s Consumer Confidence Index is at record lows (lower than during Covid lockdowns and the GFC), a metric which is historically highly positively correlated with new car sales. This data suggests there will be slowdown in consumer demand, which may worsen in H2 when things like the Ofgem energy price-cap rise takes effect in October. Given that cars are a necessity for many, we don’t see demand disappearing, but consumers may trade-down to cheaper models or buy used instead of new.

¨ Cost pressures on dealers and macro uncertainty set a cautious tone for UK PLC forecasts: A tight labour market, the removal of pandemic-related support, high energy costs and rising interest rates create headwinds for dealers’ earnings in 2022 and beyond. Following a record 2021 for most dealers, there is caution on 2022 profit forecasts, which show a step-down in adj. EPS of 28.7% on average, or 41.5% when excluding Inchcape. We think the order backlog and waiting lists for new vehicles underpins the franchised dealer 2022 forecasts, but H2 trading will be tougher than H1. Profits are typically H1-weighted – the FY16-FY19 average H1:H2 PBT split (excl. loss making periods for LOOK and PDG) was 62:38. Given the strong trading indicated by updates so far this year and the macro headwinds expected in H2, it’s likely that 2022 will be more heavily H1-weighted for some UK motor dealers.

¨ Valuation: Despite the headwinds and the forecast step-down in 2022 profits, we believe the sector is undervalued and not reflective of forecast profitability and cash generation. Pendragon, Vertu and Lookers are all trading on one-year-forward P/E ratios of 6-8x. The sector has historically traded through the cycle on a P/E range of 8-14x, making the current valuations look exceptionally low – it is difficult to see how these three companies could derate further from here. Inchcape is trading on 11.5x FY22 earnings, which we think is materially undervalued for its forecast fundamentals and growth prospects. Motorpoint trades at a significant premium to the rest of the sector (FY1 P/E of 16.6x) – we do not think Motorpoint’s relative valuation is supported by higher earnings quality or sufficiently better EPS growth potential, so multiples ought to converge with the franchised dealers. For most motor retailers, the strong trading in 2021 has repaired and strengthened balance sheets – we think property portfolios and cash balances help to underpin share prices. In particular, Lookers is trading near FY21 property assets per share (77.4p) and Vertu is trading below FY22 TNAV per share (66.8p).

[santangello] 19/7/2022 15:59

Yes, that's my point.....a little less desirable when xd.

[otemple3] 19/7/2022 15:33

Not sure I follow, ex divi was 30th June

[santangello] 19/7/2022 14:11

xd status holding the price back during this bullish couple of daysby the looks of it....Looking like a lovely medium term hold/add.Many thanks to Jeff H for the steering :)

[davebowler] 19/7/2022 14:00

Audio view from Zeus -no.3 on list

[blackhorse23] 15/7/2022 12:15

Share buy back another way to bring confidence on company , excellent job by VTU and also CURY ( LSE) who has launched recently 75 millions share buy back program ... GOOD JOB

[davebowler] 13/7/2022 10:45

Zeus Motorpoint analysis shows how well, relatively, Vertu is performing against both Motorpoint and others -

[mortimer7] 11/7/2022 10:16

Potential for consolidation in listed Motor retailers is unlikely. (Different story for the medium/smaller groups). More likely the larger dealers are to be bought by Disruptors (eg MMH) or investors from outside the UK sector. Pendragon & Lookers seem the most likely current targets so their SP's have probably got takeover potential for any gamblers. Ironic really as, IMO, Vertu are the best run & long term bet of the retailers.

[wad collector] 08/7/2022 12:44

Yeah you're right , I misread those earlier trades that were actually last nights at 55p. Oh well, can but hope, though the buybacks might have a little effect on the sp, I would rather have a bigger divi.

[otemple3] 08/7/2022 08:48

Caused by someone buying 1 share at 59p so don't think it is that significant!

[wad collector] 08/7/2022 08:29

Interesting tick up this morning against the market trend makes a new 3 month high. An optimistic noise.

[raleigh43] 07/7/2022 11:48

If there is consolidation in the sector, who is likely to swallow who?

[mortimer7] 05/7/2022 12:41

UK New car registration figures for the month of June released today by SMMT.
Total 140,958. 24% down on June last year & the lowest June total since 1996.
Interesting that 6 months year to date, number of private buys is actually up year on year, whereas the biggest fall is in the Fleet market.

So short term these numbers are not too much of an issue for Motor retailers, as traditional fleet margins are so low. The supply of available units is being channeled
to private buyers with the consequence that retailers will be able to maximise the profits on each unit (ie not discounting).

[santangello] 01/7/2022 17:50

Today's action bookended by 2 pleasing RNS's.....an acquisition and a maiden over 5% purchase by a fairly new and progressive fund management.The weekend shall be pleasent at least :)

[davebowler] 01/7/2022 08:45

1 July 2022

Vertu Motors plc ("Vertu Motors" or the "Group")

Acquisition of ancillary e-commerce business Wiper Blades Ltd

Vertu Motors, the UK automotive retailer with a network of 160 sales and aftersales outlets, is pleased to announce the acquisition of Wiper Blades Limited, a leading e-commerce business specialising in the on-line sale of car wiper blades and other associated products through operating websites. This acquisition is in line with the stated strategy of the Group to develop ancillary businesses to add revenue and profit streams that complement the core business and is further adding digital capabilities and reach. Wiper Blades Limited complements the Powerbulbs.com business the Group bought in June 2021. These businesses are complementary additions to the successful Aceparts e-commerce business that the Group acquired in 2015.

The share capital of Wiper Blades Limited, which was formed in 2005, was acquired for a cash consideration of GBP3.5m, which includes GBP1.1m of cash, subject to finalising the completion accounts. Consideration includes a payment in respect of goodwill of GBP2.4m.

For the year ended 31 August 2021, the business achieved revenues of GBP2.2m and an unaudited profit before tax of GBP0.5m. The acquisition is expected to be earnings enhancing in the current year.

Robert Forrester, Chief Executive of Vertu Motors said:

"Our e-commerce parts business is performing strongly and the addition of Wiper Blades will be accretive both financially and strategically to that part of the Group. The acquisition is in line with our strategy to develop ancillary businesses which complement the core business and enrich our digital capabilities to continue to provide technology leading edge service to our customers."

[rabiddog] 29/6/2022 15:38

Great, post it on the MCB board. I had a quick look at them and they are uninvestable, close to going bust or obtaining more finance soon. How you can move to them from VTU is frankly crazy.

[blackhorse23] 29/6/2022 11:53

MCB mcap 30 millions, yearly revenues close to 700 millions, strong growth forecast

[blackhorse23] 27/6/2022 10:32

Sold it & bought MCB

[rabiddog] 22/6/2022 14:47

Fair enough Aspringo. I’m mainly invested here for the NAV which is 67p. Liberum have predicted eps of 7.6p going into next year, so PE of about 7 at this price also seems v cheap.

[aspringo] 22/6/2022 12:34

Sold out today, despite goodish rns, visited a friend who works in a chain of 4 car,van outlets.Last year cars sold themselves he said I'm trying to go through the stock to drop back some prices, as he said its dead at the moment, we're not shifting any metal.This may not apply to this company.Good luck all in these unsettled times.

[blackhorse23] 14/6/2022 08:16

RBG excellent results posted today , profit made 10 millions pounds

[blackhorse23] 10/6/2022 10:20

Check out IGR share price forecast , it's upwards by 600% , revenue up all sectors by 15% for IGR ,