S & U PLC (LSE:SUS) should see “robust trends” continue into next year, according to analysts at Peel Hunt, who reiterated a ‘buy’ recommendation on the specialist lender.
The Peel Hunt analysts said the stock is not “adequately reflected” by its current share price and it, therefore, offers “attractive value.”
Analysts at the City broker believe its previous estimate of £287mln receivables for 2023 is conservative and now expect that to be roughly £300mln for the group's motor finance arm, Advantage, albeit that there could be a slowdown in demand for used cars over Christmas.
Cash collections at Advantage in the period between 1 August and 7 December 2022 remained in line with the first half of the year at 93.7% compared to 94.3%.
“Whilst forecasting is currently complicated by elevated macro uncertainties, it increasingly seems impairment will remain subdued in 2023, supported by continuing strength in used car prices and ongoing refinements to underwriting criteria,” the Peel Hunt analysts said.
Higher receivables growth should translate into increased revenues, they added, which “should absorb the effects of economic-driven pressures” notably higher inflation and interest rates.