S&U (SUS), which is now a mono line car finance Company after disposing of its home collected credit business, announced a trading update with their AGM statement today. Despite recent concerns about economic growth and consumer spending this actually reads quite well as they said:
"Trading is very good. In fact, despite a generally more restrained recent economic outlook in the UK, Advantage Finance has recently seen an acceleration in its already impressive motor finance transactions growth rate."
They also said that customer numbers and net receivables were both up by about 10% since the year end with collections and margins all in line with their budgets. This continues a long run of positive growth from this business and is obviously helped by the now buoyant car market, which is also evidenced by strong Q1 trading update from Lookers (LOOK) today.
Strong demand in this area has probably also been driven by the increasing use of personal contract purchases (PCP's) which have been behind much of the growth in consumer debt in recent years and also gives a regular supply of three year old cars to the second hand market. The contrary view might be that this is as good as it gets for the car market in the UK as evidenced by the decision of Motor point to float this year, I guess time will tell on that.
On S&U given the growth in the first few months of their financial year they seem on track to at least hit strong forecast growth at this stage and if they do, at a price of 2189p this would leave them on a reasonable looking 13x or so with a 4%+ yield. They are towards the bottom end of their recent trading range (see chart at the end) and as such seem like a strong hold to me unless you are worried about a potential reversal in the UK car market.