Edison Investment Research - SU (SUS) Update: Focus on growing car finance

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Edison Investment Research

Update: Focus on growing car finance

Following an unsolicited offer, S&U is selling its home collect business. Strategically, the sale allows greater resource to be devoted to the higher-growth car finance business (cash proceeds Â£82.5m, NAV increased by Â£47m) and an as yet unquantified but significant capital repatriation. Our valuation shows a modest increase on the disposal. We have cut our near-term normalised earnings forecasts modestly as the benefit of the full deployment of the sale proceeds is unlikely in the forecast period.

20/07/2015 7 EN

Underlying

S&U

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United Kingdom

Provider

Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Edison Investment Research

S&U - Set for further growth with tighter credit criteria

S&Uâ€™s core non-prime motor finance business, Advantage, has delivered 18 consecutive years of profit growth, including a 20% increase in FY18. A mix change towards higher-risk customers meant a higher rate of impairment but the risk-adjusted return on receivables only declined slightly and, looking ahead, should be at least stable following a tightening of criteria. Meanwhile, the scope for profitable receivables growth seems good given a market share of c 1% and, separately, the property bridging pilot could provide an interesting diversifying source of growth.

April 12, 2018 April 12, 2018 12 EN

Edison Investment Research

Update: Strong growth, strong balance sheet

Following last yearâ€™s profitable sale of its stable but relatively low-growth home credit activity, S&U is now focused on its well-established and fast-growing motor finance business, Advantage. It is also looking for opportunities to invest in a new business, but will not do so unless the right opportunity appears. In the meantime, Advantage continues to make strong progress and S&U appears cautiously valued.

May 20, 2016 May 20, 2016 8 EN

Edison Investment Research

Outlook: Growth opportunities and delivery

S&U Group is fundamentally changing following the sale of its home collect business (Â£50.5m profit on disposal and a Â£1.25 special dividend). Resources (S&U currently has net cash) will be devoted to accelerated growth in motor finance and SME specialist lending. The special dividend was below our forecast, but reflects management confidence in its opportunities. H116 motor division profits (Â£9.7m, Â£7.7m in H115) were ahead of the run rate of our estimates, primarily due to better impairments.

October 1, 2015 October 1, 2015 12 EN

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January 10, 2025 January 10, 2025 1 EN

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Update: Focus on growing car finance

S&U - Set for further growth with tighter credit criteria

Update: Strong growth, strong balance sheet

Outlook: Growth opportunities and delivery

Manx Financial Group - Termination of coverage

musicMagpie - Termination of coverage

Topps Tiles - Accelerating growth through Q125

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