Following Paul Scott's example, I'm setting up a post for general discussion about Vertu Motors.
Please feel free to post anything about £VTU in the comments to this thread.
Rational bull & bear views welcomed. Please keep it civil!
I hold Vertu Motors (LON:VTU) – one of the main attractions to me is that its trading at less than tangible book value, despite being a profitable business.
I’ve been looking at the book valuation a little more, in particular the method to value the “Freehold and long leasehold land and buildings”. At 28/2/21, the accounts show this has a book value of £229m.
The annual report says that “Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. Cost includes expenditure that is directly attributable to the acquisition of the asset. Assets’ residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end. Freehold land is not depreciated.”
If property is stated at cost, would it be a fair assumption to say that it's likely to be undervalued right now on the balance sheet, given the general increases in the valuations of land / buildings in recent years? And, if so, the shares are actually potentially trading at an even greater discount to the value of tangible assets than it may initially appear?
Apologies if that’s a daft question!
