Peel Hunt has reiterated its 'buy' rating and 2,000p price target on S&U PLC (LSE:SUS) after the lender’s third quarter update showed the business continuing to recover from last year’s regulatory disruption and broader weakness in the motor finance sector.
The broker notes that profits at the end of the quarter were ahead of budget, while group net receivables have climbed to about £491 million, rising steadily month by month.
The standout again is Advantage, the motor finance arm, which has fully emerged from its section 166 review and is now showing “strong momentum”.
Receivables have risen to about £318 million, a 14% jump on the previous quarter, helped by record application numbers. Margins have improved as the company focuses on higher-quality lending, and collection rates are running at record levels.
Aspen, the property finance division, is also progressing despite what Peel Hunt calls more challenging market conditions. Its receivables book has grown to roughly £173 million, with growth held back only by heavy repayments, which at £160 million year to date are ahead of budget. Advances remain solid and the broker expects Aspen to deliver a “good profit” for the full year.
Forecasts are unchanged, with Peel Hunt still looking for £31 million of pre-tax profit and 191p in earnings for the year to January 2026. With net borrowing rising to £241 million, the group is working on securing larger funding facilities to support future growth.
S&U shares have recovered well over the past year, the broker says, as momentum has returned. The valuation remains undemanding at about 9 times earnings, or 0.9 times tangible net asset value, leaving Peel Hunt comfortable maintaining its Buy stance.