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Business description

S&U’s Advantage motor finance business lends on a simple hire-purchase basis to lower and middle income groups that may have impaired credit records restricting access to mainstream products. It has c 59,000 customers. The Aspen property bridging business is expanding its loan book (c £18m January 2019).

Stock data

Market cap.£254m
Last close2,115.00p
High / Low (52 weeks)2790.0p / 1920.0p
Stock market listingLN
Forecast net debt (£m)110.5
Forecast gearing ratio (%)67

Price performance

Relative *(0.8)(3.2)(4.8)

* % Relative to local index

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Company news

Investment summary

S&U’s year-end trading statement indicated that FY19 results would be in line with expectations. Motor finance new business has slowed recently reflecting a combination of more intense competition and S&U’s maintenance of tighter credit criteria. As a result, FY20 starts with lower receivables than we had assumed, and it also seems prudent to allow for lower growth than previously. Our FY20e EPS is reduced by 4.7% but the prospective ROE remains above 17%.

Last updated on 07/02/2019

Y/E Jan Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) P/E (x) P/CF (x)
2017A 60.5 27.1 25.2 169.1 12.5 N/A
2018A 79.8 33.3 30.2 202.4 10.4 N/A
2019E 90.7 39.2 34.3 230.1 9.2 31.5
2020E 95.9 42.7 36.5 244.6 8.6 103.3

Last updated on 07/02/2019

Latest video

Executive Interview – S&U

Industry outlook

The reduced growth in receivables and lower risk-adjusted yield led to a tempering in our estimates. For the FY19 year this was marginal (-1.5% for EPS) with an 8% reduction for FY20e. Even so we still look for an ROE of over 17% and believe the discipline shown in holding to pricing and credit criteria at Advantage is a positive sign for investors.

Last updated on 01/02/2019

Key management

Chris Redford, FD
Anthony Coombs, Executive Chairman of the Board

Company address

2 Stratford Court
Cranmore Boulevard
B90 4QT
United Kingdom
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