Demand for sub-prime motor finance might not be abating, but S&U (SUS) is getting pickier about who it lends to. While applications to Advantage were up 16 per cent during the first half, the approval rate fell to 25 per cent of applications from 31 per cent at the prior year-end. The actual transaction rate was even lower at 2.3 per cent or 11,822, just shy of last year’s record.
Nevertheless, Advantage customer numbers rose to 58,000, up almost a fifth year on year. Yet rolling 12-month impairments also increased to 24.7 per cent of revenue, from 21.9 per cent at the end of January, which chairman Anthony Coombs attributes to more customers taking out loans from short-term credit providers. That is now more accurately reflected in the group’s affordability testing, he says, with early repayment evidence from customers acquired during the period pointing to a reduction in impairments.
Aspen Bridging reported a maiden pre-tax profit of £279,000, from a loss on a similar scale in the comparable period. However, increased investment in Aspen and Advantage meant gearing rose to 78 per cent, from 56 per cent. Management says it expects debt to continue to rise during the second half, although not as fast, with the potential for further committed term facilities.
Analysts at Peel Hunt expect adjusted pre-tax profits of £35.7m for the year to January 2019, giving EPS of 241.5p (up from £30.2m and 203.8p in 2018).
| S&U (SUS) | ||||
| ORD PRICE: | 2,640p | MARKET VALUE: | £317m | |
| TOUCH: | 2,560-2,640p | 12-MONTH HIGH: | 2,790p | LOW: 1,975p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 1,289p | NET DEBT: | 78% | |
| Half-year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 37.6 | 14.3 | 96 | 28 |
| 2018 | 44.5 | 16.7 | 113 | 32 |
| % change | +18 | +17 | +17 | +14 |
| Ex-div: | 25 Oct | |||
| Payment: | 16 Nov |
