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S&U

Positioning for sustainable growth

Update | Financials | 27 Sep 2018

S&U’s non-prime motor finance business has experienced a further increase in the rate of impairment as some of its customers have been pressured by real income constraints and use of newer short-term credit products. Tighter criteria have been adopted in response and should reverse this trend while the Aspen property bridging pilot, if given the go ahead, should provide a useful additional source of growth in a specialist market.

S&U

Set for further growth with tighter credit criteria

Outlook | Financials | 12 Apr 2018

S&U’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.

S&U

Good loan growth and credit experience on track

Update | Financials | 12 Feb 2018

S&U’s year-end update confirms strong growth has continued at the main motor finance business with customer numbers up 26%, while credit criteria have been tightened to underpin the quality of receivables prospectively. Confidence in the property bridging business is growing, although it remains at a trial stage. Overall trading is in line with management expectations and our estimates are unchanged.

S&U

Positive trend in quantity and quality of lending

Update | Financials | 08 Dec 2017

S&U’s trading update for the period since its half-year end confirmed that it is trading in line with expectations and our estimates are unchanged. Transactions and receivables outstanding continue to grow even though underwriting criteria have been tightened. Impairment rates have edged up further but should stabilise and reverse as the loan book mix evolves.

S&U

Strong loan growth continues

Update | Financials | 05 Oct 2017

First half loan growth at S&U’s motor finance business remained strong at 30%, even though lending criteria have been tightened following a previous mix change towards higher-risk customers. Impairments are set to stabilise as the portfolio rebalances, while the company’s focus on providing hire purchase loans to non-prime borrowers for used vehicles using a well-established underwriting system should provide reassurance to investors concerned about the wider motor finance market.

S&U

Strong growth, cautious approach

Outlook | Financials | 07 Apr 2017

S&U's FY17 results showed continued strong growth in motor finance receivables with an increase of 33%. Competition has had some effect on cost of sales and mix change has been reflected in an expected increase in impairments but pre-tax profit growth was still above 20% and the outlook remains encouraging. The Aspen Bridging finance pilot may provide another avenue for growth while it is reassuring that management is taking a prudent approach in this new area.

S&U

Trading remains strong

Update | Financials | 13 Feb 2017

In its year-end update, S&U confirmed FY17 finished strongly and in line with market expectations. Advantage motor finance recorded a 32% increase in customer numbers and the impairment ratio is running in line with expectations. Funding remains in place for further growth at Advantage and the bridging finance pilot, which is now open for business.

S&U

Strong growth continues

Update | Financials | 15 Dec 2016

S&U's December trading update was reassuring, confirming strong growth in both customer numbers and receivables in the Advantage motor finance business. While impairments relative to revenues have ticked up, this was in line with management expectations. Our estimates are essentially unchanged and the valuation appears conservative given continued growth potential at Advantage and the new opportunity that the bridging finance pilot may provide.

S&U

Motor finance drives growth, bridging an option

Update | Financials | 12 Oct 2016

S&U's car finance business, Advantage, continues to make strong progress and has recorded compound annual growth in customer receivables of 34% in the last five years. The business is set to remain the principal growth driver for the group, but S&U has identified secured bridging finance as a potentially attractive area in which to deploy some of its lending capacity and plans to launch a pilot business by the end of 2016. If fruitful, this business would provide both diversification and an additional avenue for growth.

S&U

Strong growth, strong balance sheet

Update | Financials | 20 May 2016

Following last year'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.

S&U

Growth opportunities and delivery

Outlook | Financials | 01 Oct 2015

S&U Group is fundamentally changing following the sale of its home collect business (£50.5m profit on disposal and a £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 (£9.7m, £7.7m in H115) were ahead of the run rate of our estimates, primarily due to better impairments.

S&U

Focus on growing car finance

Update | Financials | 20 Jul 2015

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 £82.5m, NAV increased by £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.