S&U PLC heavily geared to UK lockdown easing says Peel Hunt

S&U PLC () is heavily geared to the easing of lockdown in the UK, says Peel Hunt, which has raised its price target for the specialist lender by 26% to 2,669p.

Recent results were ahead of expectations said the broker, with the planned reopening of car dealerships on 12 April likely to lead to the release of additional pent-up demand.

S&U’s provisioning is also conservative, said Peel Hunt in the note.

Car finance arm Advantage’s provisions in January 2021 were 27% of gross receivables (FY20:18%), which appears high by industry standards, it said, and increases the company’s sensitivity to economic recovery through the potential for future provisions releases.

Growth in Aspen Bridging is also accelerating and now that it has been accredited for CBILS lending the broker expects further expansion in the current year.

Peel Hunt adds that its target price is now 19% above the share price and consequently it has raised its rating to ‘buy’ from ‘add’.

Shares were unchanged at 2,300p.