Value

  • I have recently found myself wondering if this low interest rate environment means economic cycles that we have loved and feared are now a thing of the past and the economy is more like a drunk stumbling along the pavement. And therefore maybe the underperformance of value is actually correct as the only growth is structural rather than cyclical. Until the graph below reminded me that these thoughts happen at the moment of capitulation. It may well be time for the pain trade of buying value.
  • And there are some very deep value stocks out there. I would point out a few contenders in the car boot sale:
  • STM                – PER 7.2, Yield 5.2%
  • Just Group      – Price/NTAV 0.2
  • MorsesClub     -PER 9.2, Yield 6.6%
  • Miton               -EV/AUM 0.9%
  • Gordon Dadds-PER 7.5, Yield 5.3%
  • Amigo              – PER 6.7, Yield 7.9%
  • Arrow Global   -PER 5.3, Yield 7.2%
  • IPF                  -PER 3, Yield 13.2%
  • Bank of Georgia- PER 4.8, Yield 6.1%
  • Plus 500          – PER 2.5, Yield 9.6%
  • TPICAP           -PER 8, Yield 6.2%

Bank of Georgia – H1 Results

Share Price 1346p

Mkt Cap £644m

Conflict Disclosure: No Holding

  • Results  PBT up 8.8% to GEL 223.4m which equates to a ROAE of 23.7%. Impairment charge reduced from 1.7$ to 1.5%. Loan book growth was 19% in constant currency, 30% reported currency, while the Tier 1 capital adequacy was 13.3%, compared to a requirement of 11.6%. Outlook is well placed to deliver strong growth over the coming years.
  • Estimates Full year estimates look for GEL 502m PBT, which looks reasonable in the light of GEL 223m in H1
  • Valuation PER 4.8, Yield 6%. Price/Book is 1.2 and the bank has just delivered 23% ROAE
  • Conclusion The shares are down 24% since May and these are stellar results. Unless there is a Russian invasion imminent the force of gravity on the share price will reverse.

jeremy@charltonillingworth.co.uk