logo-loader
viewS & U PLC

S & U sees pick-up in trading since the General Election

The used car market remains robust and its Advantage business, to coin a phrase, has taken advantage of this

S & U PLC -

S & U PLC (LON:SUS) saw its shares rise on Tuesday as the specialist motor finance and property bridging loan lender said its performance in the financial year just ended was in line with expectations.

In a statement, the company noted that trading since its last update, just before the General Election, has seen an improvement in transactions in both parts of its business - Advantage motor finance and Aspen bridging loans.

READ: S&U trading holds firm despite UK’s “political vacillation”

The used car market in which Advantage exclusively operates remains in robust health, S & U added.

In contrast to the new car market, which fell by 2.4% in 2019, sales in the much larger used car market remained around their long-term average of 7.9mln vehicles. S & U noted that used car prices have stabilised and highlighted a report in January's Motor Finance magazine which indicated a rise in overall used car prices of 6.4% during 2019.

All of which has been good news for Advantage, which saw a record number of loan applications and more than 23,300 new agreements in the year to the end of January - the company’s financial year. This represents an 11% increase year-on-year.

S & U said customer numbers are now at a record 64,200 and net receivables stand at around £280mln, up about 8% on last year.

Signs of property market picking up

Aspen Bridging, the group’s relatively new property bridging operation, continues to make progress. There have been signs of the property market picking up following the decisive General Election result, but S & U added that there will be a lag before this upturn in activity is fully reflected in the Aspen business.

Some borrower exits are still slower than anticipated but the level of repayments including late-stage repayments has improved recently, resulting in £15mln being repaid during the final quarter of the financial year. Taken together, these trends reinforce management's confidence in Aspen's growth prospects in a healthier property market.

Despite a slowdown in the growth of profits, the board has recommended an increased second interim dividend of 36p, compared to 35p the year before. Total dividends for the year will, therefore, be up 4.5% year-on-year at 70p.

"Although the UK may not yet have reached the sunlit uplands of renewed growth and consumer confidence which the General Election result makes possible, S & U's prospects for the year ahead are good. From a sound financial base, S & U is very well placed to take advantage of this in our habitually responsible and sustainable way,” said Anthony Coombs, the S & U chairman.

Peel Hunt repeats ‘add’

In a note to clients, analysts at Peel Hunt pointed out: “The overall message from S&U’s pre-close update is that trading for the year to January is expected to be in line with consensus expectations.”

They said they were making no changes given the overall comment, and for the year to January 2020, the Peel Hunt analysts are forecasting pre-tax profits of £35.0mln and earnings per share of 239p, broadly in line with the consensus for £35.7mln and 241p respectively.

Peel Hunt repeated an ‘add’ rating on S&U shares which its analysts noted “trade on c8x FY21 earnings and expected to yield just over 6%.”

In late morning trading, S&U shares were 2.7% higher at 2,300p.

 -- Adds analyst comment, share price --

Quick facts: S & U PLC

Price: 1710 GBX

LSE:SUS
Market: LSE
Market Cap: £207.37 m
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

In exchange for publishing services rendered by the Company on behalf of S & U PLC named herein, including the promotion by the Company of S & U PLC in any Content on the Site, the Company receives from said issuer...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

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