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Vertu Motors
Acquisition and portfolio changes

We note the announcement this morning from Vertu confirming the acquisition of four Volkswagen Passenger car dealerships in West Yorkshire. We also note an update on a number of portfolio changes as management continue to focus on optimal capital allocation. The group has paid a total consideration of £9m, with minimal goodwill of £1.35m. We are leaving our trading assumptions unchanged at this juncture as we anticipate a comprehensive pre closed trading update during the beginning of March, but due to timing anticipate modest dilution to Feb 2020 EPS, albeit expect this transaction to be EPS enhancing during the first full year of ownership (Feb 2021 and beyond). We do however update our net debt forecast to reflect the cash consideration of £9m. We believe the Group is well positioned long term given its strong balance sheet, rising FCF generation (FCF yield in 2021E of 9.9% rising to 11.4% in 2022E) and strong track record of disciplined growth.

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  • 16 Jan 20
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City of London Investment Group potential for a ‘12% annual return for many years’
city-of-london-investment-group-potential-for-a-12-annual-return-for-many-years-15-01-2020

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  • 15 Jan 20
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City Of London Investment Group
FuM leaps to over $6bn

CLIG’s Funds Under Management (“FUM”) rose 11.6% to US$6,014m; Sterling strengthened 3.9% against the US dollar to £1 = US$1.32 and Emerging Market Index (MXEF) rose 5.7% to 1,115. CLIG’s Emerging Market, International Developed and Opportunistic Value strategies outperformed with good NAV performance and narrowing discounts.

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  • 14 Jan 20
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Boohoo.Com
A record Christmas drives upgrades

Boohoo Group has delivered a stellar performance over the key Christmas trading period resulting in a further upgrade to FY20 guidance, its third since 5 th September. Strong growth has been seen across all brands in all key geographical regions. We note the excellent performance seen at the Group’s most mature brand boohoo, where sales in the four months to December are up 42%, an acceleration on the 27% YOY growth posted in Q1 and a continuation of the exceptional 41% growth seen in Q2 of this year. Revised EBITDA margin guidance of 10.0% to 10.2% (previously c.10.0%) is after accounting for investment in three brands acquired in the year and implies strong underlying trading in the Group’s more established brands (boohoo.com PLT and Nasty Gal). The Group continues to deliver an impressive cash performance, with £245m net cash at 31 December.

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  • 14 Jan 20
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Flowtech Fluidpower
Weak UK economy in Q4 impacts trading

Yesterday’s UK GDP data highlighted the weakness experienced in the economy during calendar Q4. This has been reflected in the trading patterns at Flowtech with weaker than anticipated demand leading to a 10% reduction in organic revenue in Q4. For the year just ended, to Dec 2019, revenue is expected to be c. £112.4m (prev. £115.0m) leading to Profit Before Tax of £9.0m (prev. £10.8m). Importantly, the net debt estimate is better than anticipated at £16.6m (ZC estimate £17.0m) as the operational improvements in working capital reduce gearing. The revision to the FY19 outcome is rolled through into FY20 and FY21 and, as previously assumed, are based on the conservative assumption of a small amount of cost savings to come through but little revenue growth. Despite the revision to forecasts, the valuation of c. 10.0x FY20 earnings is not stretched and Flowtech yields an attractive 5.5%.

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  • 14 Jan 20
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Cambria Automobiles
AGM Trading Update

Cambria has confirmed trading in the first three months of the financial year has been in line with expectations despite continued challenging conditions. Clearly near-term trading conditions remain difficult, albeit sterling has strengthened post-election, which may provide a platform for stronger new car sales further down the line. However, we believe It will take time for OEMs to adjust to this recent FX strength. We expect a subdued March new car market as a result but see potential for recovery in H2. We remain firmly confident in Cambria’s ability to continue to execute and outperform the market as it has in recent years. We maintain our forecasts at this juncture and anticipate a preclose H1 update in March.

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  • 09 Jan 20
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