Vertu Motors (VTU) moved up a gear at the interim stage, driven by an improving new car retail market that boosted like-for-like retail volume by 7.9 per cent and an eye-catching 7.5 per cent growth in used car volumes. Management now believes that profits for the full year will accelerate past brokers prior estimates, so analysts at Panmure Gordon have marked up their adjusted pre-tax profit estimate from £7.3m to £8.3m and upgraded EPS estimates by 7 per cent to 3.2p.
During the six-month period, Vertu opened four sales outlets and added a further six in September, which takes the total sales outlets to 86, making the company the ninth largest UK car dealer by revenue. Many of these are owned on a freehold basis and these sites are worth £83.8m, or 42p a share - 10 per cent more than Vertu's current share price.
The company's business remains highly cash-generative, too, so despite spending £7m on capital expenditure and acquisitions, net cash only dipped from £3.5m to £2.2m. True, the dealerships acquired in the first half made a £200,000 loss, but they also provide an ideal opportunity to drive future earnings growth as Vertu's management has a great track record of turning round businesses.
VERTU MOTORS (VTU) | ||||
---|---|---|---|---|
ORD PRICE: | 37.25p | MARKET VALUE: | £74m | |
TOUCH: | 36-37.25p | 12-MONTH HIGH: | 37.25p | LOW: 22.75p |
DIVIDEND YIELD: | 1.7% | PE RATIO: | 14 | |
NET ASSET VALUE: | 51p* | NET CASH: | £2.2m |
Half-year to 31 Aug | Turnover (£m) | Pretax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2011 | 547 | 4.09 | 1.86 | 0.20 |
2012 | 628 | 5.18 | 2.00 | 0.25 |
% change | +15 | +27 | +8 | +25 |
Ex-div: 2 Jan Payment: 25 Jan *Includes intangible assets of £21.5m, or 11p a share |