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Northgate Plc - Tag Along?

November 29, 2012 | About:
Gusto Duel

Gusto Duel

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Rating: 3.1/5 (15 votes)

Comments

batbeer2
Batbeer2 premium member - 1 year ago
Hi Gusto Duel,

Thanks for an interesting idea.

Question: Does the company disclose the current composition of the fleet?

Net PP&E stands at 800m or so - about the same as Enterprise Value. It seems to me investors are buying some 90,000 vans at roughly 8,900 apiece. This seems reasonable to me to me but not absurdly cheap (unless they are all MB or VW).

With the fleet shrinking, they have been selling old vans faster than they are buying new ones. I find it fascinating that they are collecting 160m in cash from the sale of (my rough estimate) 40 000 vehicles per annum. That works out to 4.000 per vehicle sold. I should hope those are old Vauxhalls they're selling and not Sprinters. I may be wrong on these numbers; correct me if I am.

- EDIT - Silly me, I just saw you mentioned it: Fleet composition by make in 2012 was Ford 37%, Mercedes 20%, Volkswagen 16%, Peugeot 15%, Vauxhall 4% and Other 8%.

With that I would add a couple of catalysts to your thesis.

1) They may be getting rid of inferior old vans and hanging on to the better ones. This should be good for maintenance expense going forward.

2) At some point, they will start getting better prices for their used vans simply because the average van in the current fleet is worth more than the vans they had before.


It may be worthwhile to check out the mix in recent years.
gusto.duel
Gusto.duel - 1 year ago
Hi Batbeer,

I thought that their fleet is not that old age (My car is 19 years old... but it was not the yardstick (-:).

See below the data from British Auctions_[www.british-car-auctions.co.uk].

They also have good brands in their fleet.

Fleet/LeaseAvg AgeAvg MileageAvg ValueSale vs CAP
Oct 201144.2771,021£5,111103.62%
Oct 201245.2472,352£5,201101.52%


I look forward to see how much of the debt was paid back during April - Nov. 2012. It comes out in a few days.
batbeer2
Batbeer2 premium member - 1 year ago
LOL, I drive a car that was built 1987...

On average the fleet is young, yes. The point I was trying to make is that the value of the current fleet depends both on age as well as brand. (MB is worth more than Vauxhall).

If there has been a shift in the mix in recent years that could hide some of the value in the current fleet.

I would exepect this to be the case based on the lowish price per vehicle sold in recent years. I'll look it up myself after I'm done with my next article.

gusto.duel
Gusto.duel - 1 year ago
I see what you mean.
gusto.duel
Gusto.duel - 1 year ago
The company reported half year results.

Negative:

- rent revenues down by £61m;

- average hire revenue per rented vehicle has decreased by 1% since the beginning of the financial year.



Positive:


- Debt decreased by £110m (on 20 November 2012);

- improved bad debt levels (Spain) - charge in the period of €0.2m, compared to a charge of €2.7m in the same period last year;

- improved DOS days (Spain) to 66 days from 72 previously

- Interest costs lowered by £3.1m as a result of lower average net debt;

- tangible net asset value of 273.6p per share (April 2012 - 264.9p per share).

The key challenge remains stabilization and growth of rent revenues. They have done a good job on costs with operating profit decreasing by only £8.4m despite rent revenues down by £61m.

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