Vertu became the latest motor retailer to report a return of strong demand for both new and used cars in recent months. Although improving sentiment has seen its share price recover, it still trades at a hefty – and unjustified – discount to the value of its properties.
Since flotation, the group has built up a substantial portfolio of 78 dealerships, of which just under half are sited on freehold properties. Those assets are now worth 41.6p a share and, despite investing £11.9m on eight new outlets and several refurbishments – and spending more heavily on vehicle stocks to take advantage of improving demand - Vertu still finished the year with net cash.
Indeed, it's easy to forget that, while Vertu is solidly backed by its assets, its very well run, too. Sales have broken the billion pound barrier and a dip of 3.5 per cent in underlying new car volumes was much better than the wider 11.9 per cent market decline. Profit growth was held back by new dealerships acquired or opened in the year, which lost a combined £0.8m, but these are well on the way to making a positive contribution and management remains on the look-out for further deals.
Broker Panmure Gordon expects adjusted EPS of 3.04p for 2013 (3.19p in 2012).
VERTU MOTORS (VTU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 29p | MARKET VALUE: | £57.8m | |
| TOUCH: | 28-30p | 12-MONTH HIGH: | 35p | LOW: 23p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 50p* | NET CASH: | £3.5m | |
| Year to 29 Feb | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 0.68 | 0.14 | 0.09 | nil |
| 2009 | 0.76 | 0.07 | 0.83 | nil |
| 2010 | 0.82 | 4.63 | 2.23 | nil |
| 2011 | 1.00 | 5.25 | 2.02 | 0.5 |
| 2012 | 1.09 | 5.54 | 2.53 | 0.6 |
| % change | +9 | +6 | +25 | +20 |
Ex-div:13 Jun Payment: tbc *Includes intangible assets of £21.6m, or 11p a share | ||||
