Vertu Motors (LON:VTU) was established in November 2006 with the strategy to consolidate the UK motor retail sector – effectively it was a ‘Buy-To-Build’ vehicle.

A senior management team, with a wealth of experience within the sector, was put in place and on 27^th March 2007 the company acquired Bristol Street Motors, the 13th largest motor retailer in the UK.

Its subsequent acquisition strategy has been supplemented by focused organic growth driving operational efficiencies through its expanding national dealership network.

Today Vertu Motors is the fourth largest automotive retailer in the UK, with a network of 184 franchised sales outlets and 4 non-franchised sales operations from 143 locations across the UK.

The Group’s Brands And Its Dealerships

Its dealerships operate predominantly under the Bristol Street Motors, Vertu and Macklin Motors brand names.

Manufacturer partners are Audi, BMW, Citroen, CUPRA, Dacia, Ferrari, Ford, Honda, Hyundai, Jaguar, Kia, Land Rover, LEVC, Mazda, Mercedes-Benz, Mercedes-AMG, MG, MINI, Nissan, Peugeot, Renault, SEAT, SKODA, smart, Toyota, Vauxhall, Volkswagen and Volvo.

Its non-franchised operations include Vansdirect, Ace Parts, Powerbulbs and The Taxi Centre.

Ongoing Growth Strategy

It is intended that the group will continue to acquire motor retail operations to grow a scaled dealership group.

Its acquisition strategy is supplemented by a focused organic growth strategy to drive operational efficiencies through its national dealership network.

Management Comment

Commenting on the mid-May announced results CEO Robert Forrester stated that:

”It was pleasing to see the Group successfully navigating a difficult period of trading with declining used car values in the last few months of 2023. 

Used vehicle prices and margins have now stabilised and there has been strong cash generation from lower working capital reducing net debt below market expectations.

During the year, record revenues of £4.72 billion were achieved.

Moving to the new financial year, March and April 2024 were successful months. 

The Group delivered new retail like-for-like sales volumes ahead of the market decline in March and April. 

This demonstrates the robustness and strength of the Group’s operations.”

The Equity

There are some 337.6m shares in issue.

The larger holders include TDR Capital (9.76%), FIL Investment Advisors (5.22%), Janus Henderson Investors (5.05%), Santander Asset Management (4.22%), Nivag Holdings (4.10%), Close Asset Management (4.02%), Robert Forrester, Founder, (2.22%), William Dobie (2.09%), Norges Bank Investment Management (2.04%) and Ennismore Fund Management (1.40%).

In the middle of last month the group announced that is has agreed a new £3m share buyback programme, for up to 30m shares, all repurchased will be for cancellation.

Analyst View

Ian Robertson at Progressive Research considers that the group, in the last trading year to end February 2024, delivered a strong performance against a difficult market.

He noted that the current year had started well with trading ahead of management expectations for the first two months.

His estimates for the current year to end February 2025 are for sales of £4.97bn (£4.72bn), adjusted pre-tax profits of £42.2m (£37.1m), with earnings of 8.66p (7.8p) per share.

My View

Ahead of next Tuesday’s AGM I would expect the group to announce a Trading Update, which hopefully could show a continuation of the trend set in the first two months.

The shares, now at just 78.50p, have always been undervalued when set against the £255m capitalised group’s business.

They are not expensive, and I would expect to see them trading back over the recent 88p High scored last November, with 90p to 95p being a challenging price aim.

Fresh guidance from the company next Tuesday could well help the upwards move.

Games Workshop has reported robust growth in sales and profits for the 53 weeks ended 2nd June 2024.

It was another year of growth for investors, who have now enjoyed top-line growth in every year since 2017.

The table-top gaming miniatures company estimates its core revenue reached at least £490 million, an increase of £45 million or over 10% compared to £445 million the previous year.

Licensing income also improved, rising £5 million to £30 million and investors will look forward to developments in the recently announced licensing agreement with Amazon.

The firm’s pre-tax profits are projected to be no less than £200 million, reflecting a £29 million or 17% increase from the £171 million recorded in 2022/23. Contributing to the profit growth, the group paid out £18 million in equal cash bonuses to staff during the year to recognise their contribution, up £7 million on the prior year’s £11 million profit share.

Shareholders likewise benefited from the enhanced profitability. Dividends declared and paid rose to £138 million or 420 pence per share, compared to £136 million at 415 pence per share last year.

Games Workshop intends to publish its full Annual Report for the 2024 financial year on 30th July 2024.

The FTSE 100 gained on Tuesday amid a broad recovery in the European shares after the announcement of a French snap election last week rocked equity markets.

London’s flagship index was 0.45% higher at the time of writing while the French CAC gained 0.4%.

“European markets enjoyed a strong start to Tuesday, with the FTSE 100 the biggest gainer among the continent’s key equity indices,” said Russ Mould, investment director at AJ Bell.

However, the chipper mood in stocks was capped by a series of significant events later in the week. Just as the US digested CPI and an interest rate decision within a tight time frame last year, UK investors will learn of the most recent CPI reading tomorrow before Thursday’s Bank of England’s interest rate decision.

“Attention then shifts back to the UK, with consumer price index data due on Wednesday, ahead of the Bank of England’s decision on Thursday, where rates are expected to remain unmoved,” said Guy Lawson-Johns, equity analyst, Hargreaves Lansdown.

As with the Federal Reserve last week, the main interest in the Bank of England’s rate decision will not be the decision itself but the accompanying commentary and subsequent press conference.

Tomorrow’s CPI reading could make the BoE’s job particularly tricky, especially if it comes in hotter than expected.

Despite the potential risks later in the week, the FTSE 100 gained on Tuesday with a distinct risk-on tone, with all the focus on a rebound in European stocks.

Whitbread was the top gainer after reporting strong growth in its German unit. UK sales could have been better, but shares rose over 3% on Tuesday. Ashtead was firmly at the bottom of the index after the plant hire group revealed the impact of higher interest rates on profits.

“US-focused plant hire firm Ashtead’s markets are slowing. Hot on the heels of news that it may be looking to move its main listing to the US, this was a slightly soft set of results,” said Matt Britzman, equity analyst, Hargreaves Lansdown.

“Whether you look at revenue, profit, or guidance, it’s hard to see much for markets to get excited about here. Management would be forgiven for giving slightly conservative guidance for the coming year after several disappointments of late, and it looks like that’s the case.”

Whitbread shares booked a spot at the top of the FTSE 100’s leaderboard on Tuesday as the hotels group’s expansion into Germany builds momentum.

Growth in Germany helped offset weakness in the UK as the group’s expansion of hotel rooms in Germany was met by robust demand. UK accommodation like-for-like sales were down 2% in the first quarter while Germany steamed ahead with a 6% jump in sales.

German total sales growth was 15% and the UK was dead flat. 

The group expects its German operation to break even this year as it progresses towards a target of 10–14% return on capital. 

It’s fitting Whitbread released its Q1 results in the middle of the Euros football championship because the influx of fans to Germany is likely to play a part in Whitbread’s German operations achieving breakeven.

Investors were evidently pleased with the news and shares were 2.2% higher at the time of writing and the FTSE 100’s top riser.

“Following a sluggish start to the year, Premier Inn owner Whitbread has pulled things back and managed to deliver first quarter revenue just ahead the same period last. But there are some signs of softness in it’s UK hotels,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“After stripping out new room openings, UK accommodation sales were down 2%, with customers appearing to pull back on last-minute weekend breaks. Both occupancy and room rates have slipped a little, more noticeably in London. This isn’t hugely concerning though, as Whitbread is up against some very strong comparatives and continues to outperform the market. In the younger German accommodation division, growth is much stronger and remains on track to cross the break-even threshold later in the year. Euro 2024 is likely to provide something of a boost in this market too.”

Ahead of announcing its Annual Results on Friday of next week, 28^th June, Premier African Minerals (LON:PREM), the multi-commodity mining and natural resource development company focused on Southern Africa with its RHA Tungsten and Zulu Lithium projects in Zimbabwe, has this morning issued an Update on its Zulu Project.

The conditioning tank delivery and commissioning remains on track for completion during the week commencing 10^th July, while the sale of concentrates on hand is now expected to proceed on an ex-mine gate basis.

CEO George Roach stated that:

“Premier sincerely hope the conditioning tank will be the last plant modification and on that note, the Board remains confident regarding the prospects for Zulu and we note that at this time the development of Zulu, a complete mine, has cost the Company the better part of US$75 million, and neither this nor the deemed valuation of Zulu agreed with our take-off partner is reflected in our current market capitalisation.”

PREM has a diverse portfolio of projects, which include tungsten, rare earth elements, lithium and tantalum in Zimbabwe and lithium and gold in Mozambique, encompassing brownfield projects with near-term production potential to grass-roots exploration.

The £33m capitalised group’s shares were up 7.3% at 0.1100p on the news.

Ashtead shares fell on Tuesday after the group announced falling sales growth rates and diminishing profits.

The company was considered a growth powerhouse for many years due to its remarkable ability to shake off any economic constraints. This no longer seems to be the case and interest rates are partly to blame. 

Ashtead released results on Tuesday confirmed a prior slowdown in its core US business was not a blip. 

Fourth quarter sales growth slipped to 7%. Growth is still growth but the real concern for investors will be declining profit before tax over the full year period. Profit before tax fell to $2,230m in 2024 from 2,273m in 2023.

Higher interest rates were blamed for rising costs with financing expenses rising by around a third. Margins across all geographies were squeezed as a result. 

“Ashtead’s markets are slowing. Hot off the heels of news that it may be looking to move its main listing to the US, this was a slightly soft set of results,” said Matt Britzman, equity analyst, Hargreaves Lansdown.

“Whether you look at revenue, profit, or guidance, it’s hard to see much for markets to get excited about here. Management would be forgiven for giving slightly conservative guidance for the coming year after several disappointments of late, and it looks like that’s the case.

“But rental giant Ashtead is still demonstrating its strength, just in a softer market. The larger construction equipment players are taking market share, and that plays right into Ashtead’s hands. Mega-projects in the US will continue to act as a medium-term tailwind, and it was positive to see rental rates showing strength in the final quarter. This had been an area of concern going into the results. Longer term, the US rental market is fragmented and there’s a growing appreciation from end-users as to the benefits of rental over ownership.”

Just two weeks ago the shares of the self-proclaimed ‘UK’s most trusted electricals retail group’ AO World (LON:AO.) were up at 116p.

On 27^th March they were trading at 89.85p, that was the day before the group issued its Full Year Trading Update to end March 2024.

Its Finals will be released on Monday of next week and I feel that they will spark a fresh wave of investor interest.

The Business

The £605m capitalised company, which is based in Bolton, has the mission to be the ‘destination for electricals.’

Its strategy is to create value by offering brilliant customer service and by doing so making it the destination for everything they need, in the simplest and easiest way, when buying electricals. 

The company offers major and small domestic appliances and a growing range of mobile phones, audio visual products, consumer electricals and laptops.

It also provides ancillary services such as the installation of new and collection of old products, as well as offering product protection plans and customer finance.

The group’s AO Business operation serves the B2B market in the UK, providing electricals and installation services at scale.

Impressively the company also has a waste electrical and electronic equipment processing facility, ensuring customers’ electronic waste is dealt with responsibly.

Full Year Trading Update for FY24

In the late March statement, the company guided that its estimated revenues for the full year to end March are expected to be around £1.04bn. 

It reported that its core business continued to trade positively through its Q4 period, and that AO.com, as expected, had returned to revenue growth during the quarter.

The company also guided that it expects adjusted pre-tax profits for FY24 could be at least at the top of the previously guided range of £28m-£33m.

Founder and CEO John Roberts stated that:

“I’m pleased with the clear progress that we’re making after pivoting our focus to profit and cash generation during the 2023 financial year.

As we expected at our half year results, we returned to revenue growth in our core business during Q4 and, as a result, we’re entering the new financial year with good momentum.

With net funds on our balance sheet and a clear plan, we remain confident in our ability to deliver on our ambition for 10-20% revenue growth in the year ahead and medium-term profit guidance of 5% adjusted PBT margin.”

The Equity

There are 578,570,448 shares in issue.

On 3 April John Roberts, transferred, at nil cost, 1,360,000 shares to charity, leaving him with a beneficial holding of 104,525,876 shares, some 18.07% of the equity.

The largest holder is Michael Ashley’s Frasers Group with 23.08%.

Others include Camelot Capital Partners (20.47%), JP Morgan Securities (5.29%), Odey Asset Management (5.14%), Chris Hopkinson, director (4.47%), Macquarie Investment Management Global (4.40%), Lancaster Investment Management (4.20%), The Vanguard Group (1.89%) and Waystone Management UK (1.38%).

Analyst View

Analyst Russ Mould at AJ Bell considers that the group has had ‘more ups and downs than a rollercoaster’ during its time as a listed company.

“Like many online-based retail businesses, AO was well-placed during lockdown but subsequently, its fortunes took a turn for the worse.

Having returned to a more sustainable path towards profit and cashflow in its financial year to the end of March 2023, the company has now confirmed revenue guidance for the current year and flagged profit at the top end.”

Mould reckons that AO now seems to be getting more of the basics right and that is coming through in its financial performance.

Over at Equity Development, its analysts Caroline Gulliver and Hannah Crowe have a ‘fair value’ of 140p on the group’s shares.

Their estimates for end March 2024 are for £1,038.9m (£1,138.6m) sales, adjusted pre-tax profits of £33.4m (£12.3m), and earnings of 4.3p (2.0p) per share.

For the current year they go for £1,175.6m revenues, £38.7m profits, and 5.0p earnings.

As for 2026 they estimate £1,328.4m revenues, profits of £51.5m and 6.7p of earnings.

The average from a consensus of six analysts following the company is a 111.7p Price Objective, with the overall view looking for Outperformance.

My View

A year ago, I featured the company for UK Investor when they were just 82p.

I suggest that this group’s shares are ready for another run up towards the 115p/120p range, possibly helped by bullish comment on the finals being announced next Monday.

They are now trading at around 108p, but I am convinced that they will be going a lot higher and fairly soon.