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S&U (LSE: SUS)

Last close As at 02/07/2024

GBP19.00

▲ 40.00 (2.15%)

Market capitalisation

GBP231m

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 c 65,000 customers. The Aspen property bridging business has been developing since its launch in 2017.

Against a backdrop of improving UK consumer confidence, industry data in early 2024 indicate a stabilisation in used car prices and a pick-up in transactions. However, the FCA industry-wide review into customer forbearance and affordability is negatively affecting profitability at Advantage as it takes a cautious approach until discussions with the regulator are finalised. UK residential property market data continue to improve as inflation and mortgage rates have moderated, providing a positive trading environment for Aspen.

Latest Insights

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Financials | Update

S&U — Elevated regulatory impact

Financials | Outlook

S&U — PBT ahead, encouraging volume trends

Financials | Update

S&U — Impairments drag FY24 PBT, moderation in FY25

Financials | Update

S&U — Maintaining cautious approach
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Sector

Financials

Equity Analyst

Rob Murphy

Managing Director, Financials and Investment Trusts

Martyn King

Martyn King

Director, Financials

Key Management

  • Anthony Coombs

    Executive Chairman of the Board

  • Chris Redford

    FD

Balance Sheet

Forecast net cash (£m)

245.5

Forecast gearing ratio (%)

N/A

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (3.6) 1.3 (14.4)
Relative (2.1) (1.3) (21.2)
52 week high/low 2450.0p/1800.0p

Financials

The Q125 trading update disclosed increased pressure as S&U 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 34% to £6.9m from higher impairments. The negative effects will likely have an impact on future quarters as management expects discussions with the FCA to conclude only in H2 CY24 and lending criteria were tightened at end Q1. On the positive side, demand remains strong, with applications at a record high. Moreover, the Aspen bridging business continues to grow rapidly, with Q1 PBT up by 36% y-o-y to a record £1.45m. We have cut our estimates for FY25 EPS by 22% to 179p and FY26 EPS by 15% to 223p for an RoE of 11%.

Y/E Jan Revenue (£m) EBITDA (£m) PBT (£m) EPS (fd) (p) P/E (x) P/CF (x)
2023A 102.7 49.4 41.4 277.5 6.8 N/A
2024A 115.4 49.2 33.6 209.3 9.1 N/A
2025E 123.3 48.5 29.0 179.3 10.6 N/A
2026E 130.3 57.5 36.2 223.4 8.5 N/A

Research

Outlook

Financials

S&U — PBT ahead, encouraging volume trends

Update

Financials

S&U — Impairments drag FY24 PBT, moderation in FY25

Financials

Update

S&U — Elevated regulatory impact

Update

Financials

S&U — Maintaining cautious approach

Update

Financials

S&U — Resilient despite macroeconomic uncertainty

Update

Financials

S&U — Softer volumes but solid EBITDA growth expected

Update

Financials

S&U — Results on track to meet FY24 expectations

Outlook

Financials

S&U — Confident but remaining prudent in approach

Update

Financials

S&U — FY23 results set to meet expectations

Update

Financials

S&U — Positive trading update

Update

Financials

S&U — Experienced specialist lender performs well
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