Broker snap: Further growth expected for Vertu Motors

18th Oct 2010 11:31

Vertu Motors has seen a 72.9% increase in pre-tax profit for the half year ended 31 August as it continues to benefit from its successful acquisition strategy.Broker Panmure Gordon has raised its 2011 and 2012 forecasts by 16% and 7% respectively on the back of positive interim results published this morning from the eighth largest UK motor retailer.The broker highlights "the successful integration of acquisitions made last year, with the existing business putting in a robust performance despite market conditions deteriorating during the period."Vertu's latest acquisition came last month, when it purchased two car dealerships in Cheshire for £3.9m, taking the number of its operating sales outlets to 74.The 72.9% increase in adjusted pre-tax profit to £5.2m and 27.3% jump in revenues to £511.1m surpassed the broker's expectations."Cash generation was exceptional leading to net cash at £15.0m being much stronger than our £11.2m forecast with tangible net assets per share advancing from 36.7p to 38.3p during the course of the year."Due to sustainable growth in profits and cash generation, the company has decided to commence dividend payments in January signalling its confidence for future growth.The broker has therefore retained its 'buy' rating with a target price of 60p.