reports
- Pedro Fonseca
S&U - Regulatory uncertainty holding back recovery
S&U’s trading update, covering the H225 period up to 10 December 2024, contrasts strong growth in the property lending division with regulatory headwinds for motor finance. Positive news of the lifting of temporary restrictions on motor finance collections was quickly followed by a surprise Appeal Court ruling against other lenders regarding FCA-compliant motor finance commissions. This is a separate issue from that of discretionary commission, to which S&U is not exposed. The Supreme Court has ...
- Pedro Fonseca
S&U - The time to look ahead
In line with earlier guidance, S&U reported H125 PBT of £12.8m, a significant decline versus H124 but an improvement versus H224. Customer repayment collections and earnings in the motor finance business were materially affected by the temporary restrictions agreed with the Financial Conduct Authority (FCA). These have since been lifted, and while regulatory discussions are ongoing, this is an important step towards the strong recovery in motor finance earnings that we forecast. Meanwhile, as pr...
- Pedro Fonseca
S&U - Timing is everything
Interim results, for the six months to 31 July (H125), will be published on 8 October. Ahead of that, S&U has alerted the market that based on the H1 performance, full year PBT is unlikely to meet the previous market consensus expectations. We believe this to be primarily a timing issue, reflecting the continuing impact of the temporary FCA restrictions on collections activity in the motor finance business. Once regulatory clarity has been established, we expect a significant recovery. Meanwhile...
- Pedro Fonseca
S&U - Anticipating regulatory clarity in H2
S&U’s H1 trading statement revealed similar trends to those in Q1. Advantage Finance remains in a consolidation phase amid industry discussions with the FCA on collections procedures and forbearance. The collection rate slipped slightly from 88% in Q1 to 87% for the half year. In contrast, Aspen Bridging continues to grow healthily with receivables up 13% since year-end, ‘excellent’ credit quality and a strong pipeline. Significantly, S&U describes the negotiations with the FCA as ‘nearing their...
- Pedro Fonseca
S&U - Elevated regulatory impact
S&U’s Q125 trading update disclosed increased pressure as the company steers cautiously through the changing regulatory landscape. The payment rate in the Advantage motor finance business fell to 87.7% from an average 92.1% in FY24, which led to group PBT falling by 34% to £6.9m (Q124: £10.5m) from higher impairments. The negative effects will likely have an impact on future quarters as management expects discussions with the Financial Conduct Authority (FCA) to conclude only in H2 CY24 and lend...
- Pedro Fonseca
S&U - PBT ahead, encouraging volume trends
S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi...
- Pedro Fonseca
S&U - Impairments drag FY24 PBT, moderation in FY25
In its trading update between December 2023 and January 2024, S&U announced that FY24 PBT will be 10% to 15% below consensus of c £38m. The key reason is lower collection rates in Advantage of 90% (H123: 94%) have prompted an increase in provisions. Management expects the collection rate to partially recover in the following months. Underpinned by an improving real estate market, Aspen continues to grow steadily with net receivables just over £130m (FY23: £114m). Elevated borrowing, at £224m, al...
- Pedro Fonseca
S&U - Maintaining cautious approach
In its update for the August to December period, S&U posted good growth in its net receivables balances in both Advantage and Aspen. Advantage reported a drop in live collections to 91% (H123: 94%), but bad debts and voluntary terminations remain below budget. Aspen continues to experience good volume with transactions improving in the quarter, while repayments remain above budget. Additionally, group borrowings reached £209m as S&U continues to fund its growth initiatives. Management announced ...
- Pedro Fonseca
S&U - Resilient despite macroeconomic uncertainty
Advantage and Aspen both performed well and broadly in line with our expectations. PBT in H124 was £21.4m, 2% above H123. Impairments were better than expected, particularly at Aspen, but costs were affected by the inflationary environment and a more than twofold increase in finance expenses. Profit after tax came in at £16.2m, 5% below H123 as the tax rate rose. The group declared a dividend of 35p/share, in line with H123. S&U also increased its funding facilities by £70m to £280m in anticipat...
- Pedro Fonseca
S&U - Softer volumes but solid EBITDA growth expected
S&U held a cautious approach to new lending in H124, emphasising higher-quality customers and avoiding competition directly on price. Consequently, net receivables were 5% below our expectations in H124. Encouragingly, S&U has experienced a rise in transactions and new customer pipeline in the past two months in the Advantage motor business, but weakening consumer confidence, higher interest rates and paydowns are likely to curtail the usual rate of growth in Aspen for FY24. Despite this, impai...
S&U: 1 director
A director at S&U sold 5,300 shares at 2,480p and the significance rating of the trade was 52/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clearly showing Close p...
- Pedro Fonseca
S&U - Confident but remaining prudent in approach
As a specialist lender, S&U is sensitive to the economic background, but in its main motor finance business it has a strong track record of managing and growing through bumpy conditions. The newer property bridging business is maturing and shares a focus on customer service and a conservative underwriting approach. This provides the group with a sound basis for sustainable long-term growth.
- Pedro Fonseca
S&U - FY23 results set to meet expectations
S&U’s year-end trading update confirmed that trading for both Advantage motor finance and Aspen property bridging has remained excellent since its last update in December. Full-year results, due on 28 March, are expected to meet expectations and be above budget. The economic background and tightened lending criteria are likely to have an impact in FY24, but there is still scope for more measured, responsible growth in S&U’s areas of specialist lending expertise.
- Pedro Fonseca
S&U - Positive trading update
Lending growth in the August to December period has been ahead of our expectation, while credit quality in both motor finance and property bridging remains strong. S&U is sensitive to the macroeconomic background and continues to adjust its lending criteria accordingly to protect customers and credit performance. This provides a sound basis for further sustainable growth.
- Pedro Fonseca
S&U - Experienced specialist lender performs well
With macroeconomic clouds gathering, it is not surprising that a small specialist non-bank lender such as S&U has been derated. However, the main business has a long track record and the group is managed in a conservative way focusing on customers, targeting sustainable long-term growth and employing relatively low gearing.
- Pedro Fonseca
S&U - H1 growth ahead of expectations
S&U’s lending growth has been ahead of expectations in H123, despite relatively weak consumer confidence and a conservative underwriting policy. Credit quality has also remained high and the group continues work to underpin this for the future. This and the group’s experience of previous credit cycles should stand it in good stead to address the potential pressures arising from economic headwinds.
- Pedro Fonseca
S&U - Positive update despite macro uncertainties
S&U has started its current financial year well with Advantage motor finance and Aspen property bridging making steady progress and achieving profit ahead of budget in the period since the end of January. Credit quality remains strong and while the group acknowledges rising cost of living pressures and reduced consumer confidence, it notes that it is currently on track and has funding in place (£180m facility) to meet its growth targets for FY23. Our estimates are unchanged.
Edison Investment Research Limited: S&U (SUS): Seeing recovery and ada...
Edison Investment Research Limited Edison Investment Research Limited: S&U (SUS): Seeing recovery and adapting to grow 04-Apr-2022 / 07:00 GMT/BST London, UK, 4 April 2022 S&U (SUS): Seeing recovery and adapting to grow S&U recorded a dramatic increase in profit in FY22, but the more telling point is that average pre-tax profit for FY22 and FY21 was nearly £33m, only slightly below the pre-pandemic level of £35m (FY20). In the meantime, the group has continued to refine and develop both its businesses, which should underpin medium-term growth even if the near-term macro back...
- Pedro Fonseca
S&U - Seeing recovery and adapting to grow
S&U recorded a dramatic increase in profit in FY22, but the more telling point is that average pre-tax profit for FY22 and FY21 was nearly £33m, only slightly below the pre-pandemic level of £35m (FY20). In the meantime, the group has continued to refine and develop both its businesses, which should underpin medium-term growth even if the near-term macro background is uncertain.
- Pedro Fonseca
S&U - FY22 profit beat and positive outlook
S&U’s Q422 trading update was positive, indicating that both Advantage motor finance and Aspen Bridging are set to beat FY22 profit expectations. The main positive surprise is an exceptionally low impairment charge at Advantage, which is likely to normalise in FY23, while the group is not immune to economic uncertainty. However, both businesses are making good progress and appear well-placed to achieve medium-term growth.
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