Medium-term potential not recognised
While the VW situation may have undermined short-term market confidence about the motor retail sector, industry dynamics continue to favour the larger dealership groups. Vertu, with its strong balance sheet and proven ability to secure and improve acquisitions, has a potential that we suggest is not recognised in its current rating.
Impressive figures
Vertu Capital Ltd (L:VCBC) has produced another impressive set of figures, with interim results slightly ahead of market expectations, showing revenue up by 14% to £1.24bn and adjusted pre-tax profits by 28% to £17.0m. The group has responded effectively to the competitive challenges caused by a forced market and, although there was modest slippage in gross margins, there was a 21bp improvement at the operating level. As a measure of confidence, the interim dividend is raised by 29%; we have lifted our financial year pre-tax profit estimate from £24.5m to £25.4m.
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