Vertu Motors (LON: VTU) is the only major quoted motor dealer that is not the subject of a bid. The share price has risen by more than 31% this year, yet the valuation is still lower than for the rivals that are the subject of bids.
Supply of new cars improved, and the money made on each used car increased. Retail market share has risen to 4.6%.
In the six months to August 2023, revenues were 21% ahead at £2.42bn. There was a small dip in gross margin to 11%, but operating profit was one-third higher at £41.4m.
The Helston acquisition pushed Vertu Motors net debt to £90.7m, and that meant that the interest charge was higher, so pre-tax profit grew 12% to £31.5m. The interim dividend is 21% higher at 0.85p/share.
The share price rose 0.9p to 71p. That is similar to the net tangible assets of 70.9p/share. Trading was strong in September and the full year pre-tax profit is forecast to improve from £39.3m to £48m. Some capital investment is being delayed and net debt should start falling as the extra inventory unwinds.
The shares are trading on seven times prospective earnings. Lookers (LON: LOOK) is being acquired for nine times earnings, while the multiple for Pendragon (LON: PDG) is even higher – around elven to twelve times – although it includes the Pinewood software business.
Zeus estimates a value of 108p/share for Vertu Motors. That is equivalent to eleven times prospective earnings.
