Last week Lookers announced a record set of H1 results for the six months to 30 June 2021. Underlying PBT was £50.3m, versus an underlying loss of £36.5m in H1 2020. This stronger trading, coupled with cost control and working capital initiatives, has led to substantial cash generation. Lookers has gone from net debt of £40.7m (excl. leases) at the FY20 year end to net cash of £33.0m at 30 June 2021. With legacy issues now behind them, good evidence of trading outperformance and a strong balance
Companies: Lookers plc
Lookers has announced a very strong set of H1 results for the six months to 30 June 2021. Underlying PBT was a record £50.3m, in line with the H1 trading update statement guidance. The company announced trading in July and August was above expectations, but the voluntary decision to repay H1 furlough support of £4.1m means that full year PBT guidance remains unchanged. We will be tweaking our forecast assumptions post the analyst meeting today. Lookers is now trading at a PER of only 5.5x FY1 an
Lookers has announced a fourth upgrade to 2021 forecasts following an unscheduled H1 trading update yesterday. As a result, we are lifting our current year forecast for underlying PBT by 19% from £51.2m to £60.8m. In what is expected to be an exceptionally strong period for Lookers, we expect the Group to deliver EPS of 12.5p in 2021E, close to what our previous blue-sky EPS was of 13.2p back in February. However, we assume this level of performance is not sustained going into 2022E and 2023E as
Following a challenging 2019, the COVID-19 pandemic extended the task of restoring stakeholder confidence in Lookers, one of the UK’s leading automotive retailers. With the legacy issues now largely dealt with, Lookers can address the challenges and opportunities presented by COVID-19 and the evolution of the UK car market as the adoption of electric vehicles (EVs) accelerates. The strong balance sheet supports continued investment in technology and brands and, with a leading market position, Lo
In this note we focus on five key themes that we believe will shape the motor retail sector in the short-to-medium term. These are digital sales trends, electrification, the agency model, vehicle supply, and the economic outlook. The dealer groups have shown a great deal of resilience and flexibility throughout the Covid-19 pandemic – we expect them to continue to adapt and work closely with OEMs as the industry evolves.
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Lookers has announced a third upgrade to 2021 forecasts following stronger than expected trading so far this year. As a result, we are lifting our current year forecast for underlying PBT by 27.4% from £40.2m to £51.2m. We believe Lookers is on track to deliver EPS of 13.2p over the medium term, as set out in our note in February.
Just seven weeks on from its positive Q1 trading update, Lookers has had to raise guidance again following stronger than expected trading in April. It has also successfully renegotiated its banking facilities. The group’s strong trading performance should help continue the restoration of its reputation among investors and raises the possibility of a resumption of dividend payments. We believe the risk/reward remains positive.
Lookers has performed resiliently and flexibly in Q1 2021. The national lockdown has not caused new and used volumes to drop as much as expected, leading to an improvement in our full year forecasts. We are starting to see the benefits of Lookers’ investment in technology and its process improvements. On a FY22E PE of 7.3x, the shares still present good value to investors. We reiterate our previous blue-sky scenario analysis which can justify a price target of over 100p and we see long-term upsi
Lookers is emerging from its recent turmoil in good shape. It has replaced key management and enhanced its controls over processes, reporting, costs and cash flow. Restructuring exercises in late-2019 and mid-2020 have improved the dealership portfolio and cut £50m from payroll. This should enable the company to deliver a strong recovery in profits as demand returns with the ending of lockdown #3 on 12th April. On a FY22E PE of under 5x and trading at a 34% discount to NAV, the shares look under
Lookers’ shares remain suspended awaiting publication of the FY19 accounts. However, further extension of the audit scope means that expected completion before the end of August has again been deferred. Meanwhile, the company continues to trade as usual. Management has released a reasonably encouraging H120 update, which suggests that despite the legacy issues, the UK’s second largest automotive retailer has a reasonable chance of emerging into the market recovery later this year.
While Lookers continues to deal with a number of legacy issues, and the announced further delay to the publication of the FY19 accounts is disappointing, we are reassured to note the Group is participating in the market recovery seen by peers including Vertu and Marshall Motors since June. Ongoing progress continues to be made across cost saving initiatives with the Group backed by more than £300m in freehold property. There is no doubt deep value in this platform, which we believe will emerge a
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Draftkings has made a £16.4bn ($22.4bn) bid to acquire Entain in a cash (630p) and stock offer, valuing the target at 2800p/share. While the bid is promising, MGM (BetMGM’s JV partner) can throw a spanner in the works (counter-bid or a veto).
Companies: Entain PLC
Exactly one year ago, the FTSE 100 closed at 5,862, having fallen 100 points on the day, the lowest point since mid-May 2020, due in part, to the strength of sterling vs US$ at $1.34. One year on, the FTSE 100 has risen to 7,119, a rise of 21%, it remains 7% below the peak in January 2020. From an international viewpoint, US and European markets continue to trade at record highs. The US Federal Reserve is close to withdrawing some of its economic support this year as inflation picks up and the e
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SCS Group’s full year trading update for the 53 weeks to 31st July shows that the strong demand that has been a hallmark of post lockdown periods over the past 15 months has continued, with LFL orders through the Group’s weeks 47 to 53 up by 23.7% on pre-Covid levels. Lower costs underpin a 16% upgrade to FY21 CPTP expectations, whilst the strong order book drives a 17% upgrade to our FY22 CPTP forecast. We look for EPS of 32.2p and 30.8p for FY21 and FY22 respectively. Year end net cash of £87.
Companies: ScS Group plc
Kingfisher reported better-than-expected figures at its H1 FY21/22 results, with lfl sales and adjusted PBT coming in ahead of market expectations and management’s guidance. Lfl sales outlook for H2 has been raised, the share buy-back programme re-introduced and the interim dividend increased. However, the share price was down c.5% today, as investors worried about inflationary cost pressures and supply chain constraints which are expected to continue into 2022. We will update our estimates and
Companies: Kingfisher Plc
Pendragon have published a revised strategy update reaffirming the investment in its used car business and software platform to be funded through strategic disposals and lower capital commitments to the new car market. This includes the potential sale of the group’s US Motor Group. We have modelled the implications of successful implementation of this strategy which would result in a £200m swing from a net debt position to a cashrich group over coming years. Whilst the US disposal would be earni
Companies: Pendragon PLC
Pendragon has communicated a clear strategy focused on investment in its used car business and software platform to be funded through ongoing cash flow, strategic disposals and lower capital commitments to the new car market. This includes the disposal of the group’s US Motor Group. We have modelled the implications of successful implementation of this strategy which would result in a £200m swing from a net debt position to a cash-rich group over coming years. Whilst the US disposal would be ear
FY20 results – All Focus on Resuming Operations
Companies: Jet2 PLC
Dart Group has released an AGM statement this morning indicating satisfaction with load factors and financial performance achieved year-to-date in the context of the challenging operating environment. In addition, the Group has applied to change its name to Jet2 Plc in recognition of the recent sale of the Fowler Welch distribution business and the sole focus on leisure travel. We keep our forecasts withdrawn at this time.
The final results revealed adjusted PBT up 99% year-on-year, which was 10% better than forecast despite four upgrades during the financial year. This strong performance reflects the financial benefits that have accrued following the shift in the business model to online only, as well as management’s strategic decision to significantly increase marketing spend. A second special dividend for the 2020 financial year has also been announced, reflecting the strong cash flow characteristics of the bus
Companies: Best of the Best plc
Unprecedented times over the past 12 months have seen ScS Group deliver an exceptional set of H1 2021 results, dominated by the surge in orders post Lockdown 1.0. Group revenue grew 14.4%, with an incremental gross margin, tight cost control and UK government support (£6.6m) underpinning EBITDA* of £19.5m (£3.8m in H1 2020). We believe the average net cash through the period was c£97m (c£60m excluding customer balances). H2 2021 visibility remains low, with post Lockdown 3.0 demand uncertain, th
Compass again delivered an encouraging margin improvement in Q3 and anticipated a further “normalisation” in terms of business volume and margin for Q4.
Companies: Compass Group PLC
Strong performance in H1 means full year EBITDA is expected to be no less than £4.0m (£5.7m post-IFRS16), driving an 8% EPS upgrade while still leaving risk to the upside. Gross margin has strengthened further and forecasts assume some reinvestment to drive future growth, including in key operational areas and its EU project, which is said to be progressing well. With room for multiple expansion (vs 0.5x EV/sales) the investment case remains compelling.
Companies: Angling Direct Plc