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S&U confident it can ride out coronavirus maelstrom

Snapshot

  • Company specialises in motor and bridge loans
  • Aspen’s bridging loan book builds
  • Peel Hunt retains 'add' rating on the shares
S&U

Quick facts: S & U PLC

Price: 1625 GBX

LSE:SUS
Market: LSE
Market Cap: £197 m
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"We will emerge from the maelstrom stronger, fitter and more determined than ever before to provide the superb service to our customers"

Anthony Coombs, chairman

What S & U owns

S & U PLC (LON:SUS) is a UK lender specialised in motor finance and property bridging.

The company, which is the holding company for Advantage Finance and Aspen Finance, was founded in 1938 and floated on the London Stock Exchange in 1961.
 

What S&U does

The company’s Advantage Finance business supplies finance facilities to UK motor dealers to provide loans to customers.

Focused on the used car market, it offers loans of up to £15,000.

Advantage Finance, which launched in 1999, now has more than 150,000 customers.

Aspen Bridging is the property bridging arm of the group. The business, founded in 2017, offers short-term unregulated loans against commercial and residential properties. It supplies up to £1mln per deal with an average loan of £375,000. 
 

How it's doing

S&U increased its profits for the twentieth year running in the year to January rising by 2% to £35.1mln on revenues 8% higher at £89.9mln.

Sales fell in March, however, and its collections performance was just below normal, though cash generation remained strong.

The group said a final dividend per share of 50p will be paid on July 10.

 

What the boss says: Anthony Coombs, chairman

”S&U's long history of conservative management, a strong treasury position, the skills and flexibility of its workforce and its long-standing relationships with its brokers and loyal customers, will enable us to weather the storm.

“We will emerge from the maelstrom stronger, fitter and more determined than ever before to provide the superb service to our customers.”

 

Video

 

What the broker says: Peel Hunt 

Although it has seen little impact to date, undoubtedly Covid-19 will affect the business.

"It is too early to see any underlying trends, although it is clear that there will be minimal numbers of transaction during the lockdown (although business will still be accepted) and that customer payments will fall as incomes come under pressure.

"Given the level of uncertainty, forward guidance has been withdrawn.

"Like other lenders, the challenge is assessing the level of impairments over the next few months, and what margin of safety is built into the current valuation.

"For future profitability, the return to lending volumes is key. The stock is now trading at a small premium to book value."

Peel Hunt has a 2,300p target price and 'add' rating.

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S & U PLC still going for 'steady, sustainable growth and consistent dividend'

S & U PLC's (LON:SUS) chairman Anthony Coombs tells Proactive London's Andrew Scott their history of conservative management, strong treasury position and loyal customers makes him confident they'll be able to weather the current storm. He adds that they'll come out of the crisis in...

on 14/4/20

3 min read