Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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The Q4 and Full Year Trading Update is scheduled for Tuesday 11th, including information on the next dividend payment. Additionally, have you read the article in this week's Investor's Chronicle recommending the share? Could this be the beginning of a re-rating?
Trader's Cafe with Zak Mir: Anthony Coombs, Chairman, Chris Redford, CFO, S&U, and Graham Wheeler, CEO Advantage Finance
https://embeds.audioboom.com/posts/8166004/embed/v4
Positive H123 results
S&U's total net receivables were £370m at the end of July, up 21% from H122. Within this growth, Advantage motor finance receivables increased by 13% to £280m and Aspen property bridging loans by 56% to £90m. H123 revenue was £49.4m (+15%) and pre-tax profit increased by 5% to £20.9m; the smaller increase in profit reflected a lower-than-normal level of impairment charge at Advantage last year following previous exceptionally high pandemic-period charges. The group reported that credit quality remained strong and improving in terms of bad debt, default level and collections against due. Earnings per share increased by 6% to 140.7p and a first interim dividend of 35p (33p) was announced.
Outlook presents challenges and opportunities
While S&U indicates that both businesses continue to perform well, it acknowledges the more challenging economic background with growing pressure on household incomes and the potential for a cooling in the housing market as rates rise. Advantage has adjusted its affordability criteria to reflect conditions, refined credit metrics and broadened its range of introducers, supporting its ability to address opportunities in the market that offer attractive risk-adjusted yields. Aspen is monitoring valuations and the availability of refinancing closely, but its high-net-worth borrowers are showing resilience and it stands to benefit if some participants withdraw from the market or act more cautiously.
Valuation
Our estimates for FY23 and FY24 are only changed modestly: increases in EPS of 1.9% and 3.5% respectively, with the latter reflecting a lower assumed tax rate. The shares have shown weakness (along with peers) as the macroeconomic outlook has become more difficult and trade at a price to book ratio of 1.1x compared with the 10-year average of 1.8x. An ROE/COE model suggests the share price discounts a sustainable return on equity (ROE) of 11.3%, compared with the historical five-year average of 15.8%. The 6.7% prospective yield is an additional attraction for patient shareholders.
What kind of news are people expecting tomorrow?
Although it is only just over two months since our last trading update, S&U is pleased to report that both its motor and property bridging divisions continue to outperform its expectations, both in transactions growth, and in the quality of its book and the new business it is writing. Current Group receivables now stand at approximately £370m against £340m in May, and profitability exceeds that of H1 last year. Debt quality is reflected in strong collection rates and supported by low levels of default at Advantage, our motor finance business, and at Aspen, our property bridging lender.
However, these results do not mean that S&U has become either hubristic or Panglossian. Current political instability and differing views on fiscal policy, together with persistent UK economic headwinds do not allow for any complacency. We recognise that a potentially shrinking economy, higher inflation and interest rates, historically low levels of consumer confidence and a possible technical recession in the UK, have all contributed to a manically depressed view of the future, particularly in the UK equity markets.
Hence, although growth currently exceeds budget and expectations, we judge it sensible in light of current uncertainty about economic prospects, to temper optimism with caution, particularly in our underwriting policy. Recent adjustments are designed to continue to ensure that our customers have sufficient comfort and headroom to withstand any pressure on their household disposable incomes, which might be felt later in the financial year. These will help protect our credit quality throughout the Group, whilst in the case of motor finance, anticipating the new outcome-based Duty of Care to customers, to be introduced by the Financial Conduct Authority in one year's time.
demand falls away with rising prices, therein lies the problem
A. godo long term. hold. Well managed by the. Coombs. family. From. now. onwards. , rising. dividends. Second hand car prices. are. rising which. should increase the value of their . transactions and therefore increase. revenue
Nothing has changed in the real world, the economy, not this company's results. The market is going south it si true, but where is the connection between S&U and the Russian conflict ?
I notice ADM, DLG, SUS not doing so well but cannot figure how motor finance links to the war ...
At 2,550 SUS is an absolute bargain.
So, Interims are as expected from the trading update, dividend is, roughly, back to pre-COVID levels and Coombs sounds very positive about the outlook.
Barring an awful Winter ( whether caused by COVID or other macro events ), I think we should be looking at decent growth over the next 12 months or so ?
BB
They're good aren't they ?
A well run, plain talking company paying a decent divi . The sp over the last five years is nothing to write home about mind, but for those lucky to get in more recently, the returns have been very good. SUS is one of those companies I've been holding to greater or lesser extents for at least five years and possibly closer to ten, and I suspect will be for another 5 to 10 years.
BB
I wish mr Anthony coombs was chairman of all my other stocks.
Is this kind of stuff a risk?...
https://www.theclaimsguide.com/car-finance-claims
Whats with sus?
I’ve pinched this from a poster who put it on the Vertu discussion board.
Piece in the Sunday Telegraph today about demand for cheap cars rising.
Quote from Robert Forrester, chief exec of Vertu “ cheap used cars are flying out of the door. Anything under £9,000 is flying out”
31% of orders taken by Vertu in April and May have been for cars price at £9,000 or less, an increase of 17% on normal levels.
So some decent business is still happening even if the showrooms are closed.
Anecdotally, a friend of mine who sells second hand motors had his best week ever last week shifting 9 cars in a week and is struggling to source more bottom of the range stock.
Are we expecting any trading updates to accompany tomorrow’s AGM?
S&U: Sound liquidity, positive near-term cash flow
"The scenario of higher unemployment and pressure on average incomes that threatens S&U’s motor finance customers has become reality with remarkable speed. Nevertheless, we believe government actions should provide mitigation and even allowing for an increase in arrears the company is likely to generate cash as collections outpace much reduced lending demand, augmenting the liquidity headroom it already has. This together with maintenance of relations with customers, brokers and introducers should mean the business is positioned to progress strongly once conditions normalise."
No mention of major recession and job losses to come.
Interview with Anthony Coombs at www.proactiveinvestors.co.uk
A hold in the Telegraph business section.
Investor's Champion podcast Anthony Coombs...
https://www.investorschampion.com/channel/podcasts/more-than-money-anthony-coombs
Q4 and Full Year Trading Update due out on Tuesday 11th. News of next dividend payment.
Also did you see the article in this week's Investor's Chronicle tipping the share?
Time to start the re-rate perhaps?
Bowl forming on the chart perhaps?
Happy with that. Steady as she goes,
My broker (Saxo Bank) has suspended trading of SUS due to unkown reasons.. Anyone else face this issue?
I'm seeing active trades today so this is very strange.