Shares in S&U PLC (LSE:SUS), the specialist motor and property finance group, jumped 11% to 2,060p after a trading update showed first-quarter performance running ahead of budget despite a difficult macroeconomic backdrop.
Peel Hunt, which has a buy rating and 2,460p price target on the stock, said the update highlighted the value in shares trading at under 10 times current-year earnings and at a 10% discount to tangible net asset value.
The broker noted that Advantage Finance, the group's motor lending arm, is performing strongly, driven by robust growth, excellent repayment experience and lower bad debts.
Aspen Bridging, the property finance division, delivered profits on budget for the first quarter, with April bringing an increase in both applications and completions.
Peel said the estimated dividend yield of 6.2% on a well-covered payout added further attraction to the investment case.
S&U reported first-quarter transactions at Advantage up 63% year on year, with net receivables growing to £392 million from £348 million, while bad debt write-offs fell by nearly 41%.
Chairman Anthony Coombs said confidence in double-digit growth and return on equity targets was underpinned by the resources the group planned to make available.
The company is also concluding a securitisation project to support projected net receivables growth of 20% annually over the next three years, with terms agreed and the legal process about to begin.