AA plc are the largest roadside assistance provider in the UK based on market share, with approximately four million Personal Members and nine million B2B customers, representing over 40% of the roadside assistance market, and significantly larger than the next largest roadside assistance provider, the RAC. With our 3,000 branded 'yellow' patrol vehicles, the AA brand is highly visible on the road and responds to an average of approximately 10,000 breakdowns each day. As one of the most widely recognised and trusted brands in the UK, we have successfully leveraged our brand to become a leading provider of insurance broking services and driving services. It also offers a variety of products and services that split into three distinct areas including: roadside assistance, insurance services (including Home Services and AA Ventures) and driving services. In addition, the AA has a standalone business in Ireland, which broadly replicates the operations and activities of the UK. The AA offers Motor, Home, Travel and other specialist insurance policies to both roadside assistance Personal Members and non-Members, using a diverse panel of third party underwriters for both its Motor and Home insurance offerings, which includes many of the UK's major insurance underwriters.

Morgan Stanley downgrades Aggreko, prefers DDD and AA
Wed, 03 May 2017
(ShareCast News) - Casting its critical eye over the larger UK business services groups, Morgan Stanley said Aggreko, Berendsen and Capita, instead recommending investors own DCC, AA, Experian and Rentokil.
Morgan Stanley, which downgraded Aggreko alongside Berendsen to 'underweight' from 'equal weight', said this pair had begun to offer fewer of the attributes analysts that would suggest they will outperform over the long term: "sustainable, high returns on capital, strong cash generation and attractive growth prospects, set within a framework that is aligned with shareholder interests".

Aggreko was viewed as a "challenged business with a strong management team".

While the temporary power group's current year is felt likely to see a recovery in its local rental businesses, "its core issue of not winning enough utility contracts to offset churn, while pricing remains under pressure, should lead the equity story from here", alongside a stuttering new fleet strategy.

Berendsen was downgraded last week after another profit warning that was attributed by management to capex under-investment in the UK business, whereas Morgan Stanley's analysts see growth as unlikely to improve as competitive intensity increases in the UK market with Europe following a similar trend.

Having re-rated by 32%, G4S was given a new target price of 330p, as analysts see growth well supported this year with further restructuring benefits expected.

As for DCC, as the most preferred stock in the sector, the bullish view is that the market "is underestimating the growth potential from M&A".

AA, second most preferred, is admired for its stable cash flow, high margin, strong cash conversion and improving B2C membership.

Ex divi 11 May 5.7p payment 12 June. (Final )


3.60p interim payment already paid 28 Oct 16

Dividend yield 3.80%

08:10 09/05/2017
Broker Forecast - Credit Suisse issues a broker note on AA Plc
Credit Suisse today initiates coverage of AA Plc (LON:AA.) with a neutral investment rating and price target of 275p. Story provided by StockMarketWire.com

19 Jul
Barclays...
280.00
Overweight

Could be over sold.

AA downgraded by Credit Suisse


Equity research analysts at Credit Suisse have downgraded their investment rating on AA (LON:AA.) to underperform (from neutral), which it says is due to the near-to-medium term challenges faced in the Roadside Assistance division.

Commenting on this division, analyst Daniel Hobden, said:
"Erratic work load patterns, especially in June/July pressurised the margin in the group's largest division (79% of revenues). "We believe a solution to the inherently unpredictable nature of call-out demands on patrols is unlikely in the near-term."

The Swiss bank has also cut its target price to 175 pence per share (from 235 pence).

Breakdown service.

StockMarketWire.com
AA said trading profit slipped 3% to £391m for the year ended January 31, weighed by a higher costs from third-party garaging amid an increase in the number of breakdowns attended.

The firm declared a total dividend of 5p per share, down 46% from 9.3p per share a year ago.

Trading revenue grew 2% to £959m, while driving services revenue was broadly flat. Roadside trading revenue grew 1% to £814m as new memberships rose 7% and retention was broadly flat.

Paid membership, however, declined 1% following the discontinuation of the insurance free-to-paid channel.

Insurance revenue grew 11% to £145m as its in-house underwriter drove growth in motor policies.

The firm said it expects a 2019 trading profit in the region of £335m to £345m, targeting an annual growth rate of 5% to 8% from 2019 to 2023.

'We have made a positive start to the 2019 financial year as we begin to execute on our new strategy to put service, innovation and data at the heart of the AA with additional investments to grow Roadside and to accelerate the growth of Insurance,' said Simon Breakwell, CEO.

'We remain confident our financial requirements are well funded and will continue to seek ways of lowering the cost of borrowings and de-lever over time.'

Liberum Capital Buy 121.15 100.00 125.00 Reiterates

Interesting broker notes doing the rounds. Seems they can't agree.
Jefferies negative - "the debt burden of £2.6bn is unsustainable, in our view."
Cenkos positive - "Trading at a FY20 (Jan) EV/EBITDA of 9.4x and a free cash flow yield of 11%, we reiterate our Buy."