A stagnant economy and falling high street sales might spell danger for some loans companies, but not S&U. It's seen it all before and has just delivered a record year. Motor finance was the key driver, yet the home credit arm generated plenty of cash and, with access to consumer finance unlikely to get any easier, broker Arden Partners has upgraded current year pre-tax profit estimates from £12.8m to £13.5m, giving EPS of 86.1p (2012: 76.1p).
It may be trickier generating organic growth in home credit, given S&U prides itself on close relationships with clients, so profit growth of 7 per cent after last year's extra week is stripped out was respectable. Customer numbers rose 2 per cent and more offices are opening up in places like Swindon and Glasgow, which should help.
However, after 12 years of unhindered growth, the more scalable motor division could soon be S&U’s biggest money spinner. Profits leapt 40 per cent to £5.9m and it's collecting about £2.5m each month. Admittedly, there have been fewer competitors and that may change, but S&U has budgeted for an increase in commission to retain business. An increase in second-hand car sales as drivers reluctant to spend money on a newer model are forced to upgrade, has helped too.
S&U (SUS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 785p | MARKET VALUE: | £ 92.1m | |
| TOUCH: | 770-800p | 12-MONTH HIGH: | 790p | LOW: 547p |
| DIVIDEND YIELD: | 5.2% | PE RATIO: | 10 | |
| NET ASSET VALUE | 467p | NET DEBT: | 34% | |
| Year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 46.0 | 8.6 | 50.8 | 32.0 |
| 2009 | 46.2 | 8.3 | 50.1 | 32.0 |
| 2010 | 45.8 | 9.0 | 55.2 | 32.0 |
| 2011 | 48.0 | 9.9 | 60.0 | 36.0 |
| 2012 | 51.9 | 12.2 | 76.1 | 41.0 |
| % change | +13 | +36 | +38 | +28 |
Ex-div: 30 May Payment: 22 Jun | ||||
