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 c 65,000 customers. The Aspen property bridging business has been developing since its launch in 2017.
S&U continues to perform well. Momentum at Advantage has slowed, as the number of new motor loans fell 15% y-o-y, and we note that new lending was very strong in H223. Alongside weakening macroeconomic indicators, we have reduced our net receivables expectations, which is partially offset by increasing loan rates. We also expect cost inflation to continue to affect EBITDA. Our PBT assumptions for FY24 remain broadly unchanged at £40.9m, but we have lowered FY25 by 9% to £44.1m. Our dividend forecast is unchanged as the business generates a strong return on capital and is highly cash generative.
Financials |
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Financials |
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Financials |
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Outlook
Anthony Coombs
Executive Chairman of the Board
Chris Redford
FD
Forecast net cash (£m)
186.6
Forecast gearing ratio (%)
N/A
% | 1M | 3M | 12M |
---|---|---|---|
Actual | 3.7 | 0.0 | 6.2 |
Relative | 2.4 | (0.6) | 7.9 |
52 week high/low | 2570.0p/2060.0p |
Advantage and Aspen both performed well and broadly in line with our expectations. PBT in H124 was £21.4m, 2% above H123. Impairments were better than expected, particularly at Aspen, but costs were affected by the inflationary environment and a more than twofold increase in finance expenses. Profit after tax of £16.2m was 5% below H123 as the tax rate rose. The group declared a dividend of 35p/share, in line with H123. S&U also increased its funding facilities by £70m to £280m in anticipation of future growth. Graham Wheeler, CEO of Advantage, is to retire at the beginning of FY24 and will be replaced by Karl Werner, former deputy CEO of MotoNovo Finance.
Y/E Jan | Revenue (£m) | EBITDA (£m) | PBT (£m) | EPS (fd) (p) | P/E (x) | P/CF (x) |
---|---|---|---|---|---|---|
2022A | 87.9 | 51.3 | 47.0 | 312.7 | 7.1 | N/A |
2023A | 102.7 | 49.4 | 41.4 | 277.5 | 8.0 | N/A |
2024E | 112.8 | 55.1 | 40.9 | 256.2 | 8.7 | 11.9 |
2025E | 124.3 | 59.2 | 44.1 | 272.0 | 8.2 | 18.6 |