£277.4m market cap

2300p last close

S&U’s Advantage motor finance business lends on a simple HP basis to lower and middle income groups that may have impaired credit records restricting access to mainstream products. It has over 60,000 customers. The Aspen property bridging business is expanding its loan book (£22m May 2019).

Investment summary

S&U’s May AGM trading update was encouraging, reporting motor finance receivables in the period to 22 May up 3% y-o-y to £263m or approaching 2% compared with the end of FY19. While muted, this was positive in the context of the slowdown in transactions in H219 reflecting a tightening in credit criteria and competition. Loan applications were at a record 108,000 per month and early indicators of credit quality encouraging. Aspen property bridging continued to grow with its loan book standing at £22m compared with £18m at the year end. Group borrowing rose from £108m to £114m, but headroom remained healthy given the recently increased funding facilities of £160m.

Y/E Jan
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2018A 79.8 33.3 30.2 202.4 11.4 N/A
2019A 89.2 39.5 34.6 232.0 9.9 26.4
2020E 94.7 42.2 36.9 247.8 9.3 490.0
2021E 103.8 46.5 40.3 270.8 8.5 N/A
Industry outlook

The pricing and credit discipline at Advantage that have led to a slower rate of growth are positive for future profitability and while returns may be lower than in earlier years, the ROCE in this business remains healthy at over 15%. While still relatively small, Aspen provides an diversifying source of growth. A Q2 and H120 trading update is scheduled for 8 August.

Last updated on 25/07/2019
Share price graph
Balance sheet
Forecast net debt (£m) 123.2
Forecast gearing ratio (%) 68
Price performance
Actual (3.4) 5.0 (10.9)
Relative* (4.5) 4.5 (8.4)
52-week high/low 2605.0p/1767.5p
*% relative to local index
Key management
Chris Redford FD
Anthony Coombs Executive Chairman of the Board

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