£255.7m market cap

2120p last close

S&U’s Advantage motor finance business lends on a simple HP basis to lower and middle income groups that may have impaired credit records restricting access to mainstream products. It has over 62,000 customers. The Aspen property bridging business is expanding its loan book (£24m at end July 2019).

Investment summary

S&U’s August update was reassuring, indicating that growth in loan applications and transactions continues to strengthen in the Advantage motor finance business. Customer numbers are over 62,000 compared with over 60,000 at the time of the AGM and up 7% y-o-y. The used car market is described as robust and, prospectively, resilience is provided by the segment addressed with loans averaging around £6,000 for vehicles typically used to get to work. Similarly, its exposure to weakening car prices is much lower than for PCP lenders financing new or near-new cars. On credit quality, the early indicators on repayments of recently granted loans continue to show improvement. Aspen property bridging is also making progress but at a slightly slower pace than expected given a softening of activity in the housing market.

Y/E Jan
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2018A 79.8 33.3 30.2 202.4 10.5 N/A
2019A 89.2 39.5 34.6 232.0 9.1 24.4
2020E 94.7 42.2 36.9 247.8 8.6 451.6
2021E 103.8 46.5 40.3 270.8 7.8 N/A
Last updated on 19/09/2019
Industry outlook

While the political/economic outlook appears uncertain, the profile and long-term track record of the Advantage business in particular are supportive features in the event of unfavourable macro developments. In the meantime, overall S&U trading is on track and our estimates are unchanged.

Last updated on 19/09/2019
Share price graph
Balance sheet
Forecast net debt (£m) 123.2
Forecast gearing ratio (%) 68
Price performance
Actual 3.9 (10.6) (14.5)
Relative* 0.5 (9.8) (14.2)
52-week high/low 2605.0p/1767.5p
*% relative to local index
Key management
Chris Redford FD
Anthony Coombs Executive Chairman of the Board

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