In the midst of AGM season it seems the fund managers are calling out
their own. 42% voted against SLE’s remuneration report. 25% voted
against Schroders. While 33% voted against Amundi’s CEO pay.
M&G publishes a letter of support for Provident following Schroders
recent letter of support
Holdings, the £15m market cap wealth manager is going global
with a stake in a US firm and a strategic partnership
acquires another 4 stores for £0.5m from the money shop. Due to rebranding
costs they wont contribute until 2021 when the are anticipated to produce
a contribution of £0.3m. Good price. PER 9X the same as most
sub prime lenders at the moment,
Advice Bureau – Volumes
disclosure – No holding
approval numbers are due out today. Of course this doesn’t cover the
transfer market which is about 38% of the total mortgage market where over
the last 2 years there has been a huge switch from 2 year fixed loans to 5
year fixes. From what I can tell it would appear that there has been
around a 20-30% switch in the volumes of new mortgages moving from 2 year
to 5 year fixes over the last 2 years. Which of course will cause a
slowing in the market as the 2 year renewals now take longer to renew.
Coupled with the longer time it takes for property transactions to occur
it may be there are yet further downgrades to come for Mortgage advice
Forecasts in the year to December 2019 are for 10%
revenue growth which in the context of a 15% increase in appointed
representatives may look reasonable. However, with a consensus of a 25.7p
dividend and 28.3p of EPS any further downgrade could cause the market to
worry about the dividend
PER 19.9X and yield 4.6%
There are a number of headwinds and over the next
6 months the pressure on forecasts may be on the downside. Its hard to get
too negative in the context of 15% market share gains but this looks
unlikely to improve over the next 6 months.
Holdings – FY Results
Disclosure : No holding
numbers up 23% year to March and loan book up 17.4% to £707m. Revenue was
up 28% to £271m while the impairments increased from 21.3% to 23.7%. Cost
income ratio reduced from 21.9% to 17.5% delivering £100.1m PBT. EPS up
21.5% to 22p. Net debt /tangible equity 1.9X. ROE is 36%. Yes 36%. Outlook
Results are modestly ahead of expectations. Going forward estimates are
based off 17% revenue growth with improving margins.
8.7X. Yield 4.5%. Price/Book value 4.2X for 36% ROE.
If this performance is sustainable the shares are wrongly priced. The
returns do amount to super profits but with a market leading position in
an emerging area the competitive threats look modest as does the
regulatory threat. At worst we may expect the shares to grow in line
with profits but at some point a re rating should be expected too. The
shares are down 29% over 12 months. .
Holdings – H1 Results
Disclosure: No holding
Revenue up 61% to £36.6m and underlying EBITDA up 74% to £7.7m
representing a 21% margin. PBT up 80% to £4.5m. Statutory EPS
up 56% to 10.7p and Adjusted EPR up 49% to 14.87p. The outlook views the
future with confidence. Net cash is £7.7m
Full year revenue estimate is £79.3m, of which 46% has been delivered in
H1, resulting in 100% EPS growth for the year to 30.5p. A modest 8.5p
dividend is expected.
PER 9.3X Yield 3%. The 3 year aspirational target of £10bn
AUM, Revenue of £140m and EBITDA margin of 25%. That’s £35m EBITDA. If the
company can do that without resorting to shareholders the multiple of
EBITDA would be 3.8X.
have trawled through the acquisition history and it seems remarkably
flawless. I find myself wondering if the cross selling of protection
products to acquired companies is the magic ingredient. In any event
the shares are down 8% year to date against an improving market which
represents an opportunity in a very cheap stock.
up 17% to £50.1m PBT up 27% to £17.7m. PBT margin 35.3%. Customer
numbers up 9% to 214853 and AUA up 3% to £47.7bn. Outlook is confident
anticipate 20% EPS growth for the year
company IPO’s in December at 160p and is now 431p per share putting it on
a PER of 53 and yield of 1.2%
Undoubtedly a high quality situation where misallocation of cheap capital
is causing a squash in the doorway market “quality”. Having IPO’d at a
valuation of £650m and 5 months later being valued at £1.76bn I have got
Holdings – Pre Close Update
Disclosure: I hold
Revenue is described as “strong”. Revenue expected to be £102m and
adjusted EBITDA £19m with PAT of £13m. Results announced on 16 July.
While the results are described as strong they appear to be in line with
expectations which is 15% EPS growth. This fades to 8% EPS growth forecast
for the year just started.
PER 12X Yield 5%.
was attracted to this one as it seem safer than some in a sector where it
is difficult to trust the concept of lawyers allowing shareholders to
derive some benefit. With acquisitions being available at such low prices
I suspect more aggressive businesses may do better in the short term.
– FY Trading Update
Disclosure : No holding
to April 2019 is up 7% to £36m and a positive EBITDA is reported for the
first time of £0.6m. Cash is £2.8m and transaction volumes grew modestly
by 3%. The search for a new CEO is ongoing.
While the revenue for the year is in line with expectations the EBITDA
expectation was £0.5m. Going forward forecasts anticipate £4.5m EBITDA in
the year ahead. With £2.5m achieved last year on an underlying basis this
looks very achievable.
revenue suggests the market is not anticipating a sustainable business
which is understandable given the lack of CEO. However this platform
has the ability to be highly rated if the high quality customer list can
be better monetised.
This company has huge IP and consequently potential upside. With a modest
valuation it may well get bid approaches or the new CEO may re energise
the business. Both are good for shareholders. If it made a 30% operating
margin it would be reasonable to expect it to trade at 3X revenue which is
more than double the current share price.
– AGM update
disclosure No holding
motor finance loan book up 3% to £263m while impairment has shown a modest
improvement from the year end to 25%. Demand remains strong while
underwriting has been tightened. Aspen Bridging is now a £22m loan book.
Borrowing are at £114m against facilities of £160m
Anticipates 6% EPS growth to January 2020.
PER 9X Yield 5.7%. Price/Book 1.62X and ROE 14%
shares are very cheap as the market has been waiting for the new car cycle
to impact impairments at S&U with the traditional 2 year time
lag. The reduction in impairmnents today is therefore hugely
encouraging and these shares will bounce. I think the rabbit is
showing his ears out of the hat.
announces another mandate win for its forestry division. 4k hectares of
Irish forestry adds 3% to their total acreage managed. Forestry
accounts for 48% of Gresham’s AUM but less of revenue. Note that Liberum
forecasts are predicated on flat AUM over 2019. A full note is available
Randall & Quilter
Alan Quilter sold 500k shares on Monday at 188p per share which is 13% of
his total shareholding in the company
News arrives that Charles Stanley has started charging £420 p.a for
clients to maintain their own Crest account. Signs of progress towards
that elusive 15% operating margin target
Capital Group – FY Results
Disclosure : No holding
up 29% to E37.1bn on the back of E10bn on new money raised. Third
party AUM up 41% over the year to E29.6bn. Fund management profits up 51%
to £143.8m and group PBT up 65% to £278.3m. EPS 63.4p made up of 49p from
the Fund Management and 14p from investment company profits. Dividend for
year 45p. Importantly fee rates are reported to be maintained or
growing and outlook is “strong”
Investment company profits are difficult to predict but results look in
Valuation Per 15X
yield 3.3%. Price/Book 2.5X for ROE 22%
The company has transformed itself into a specialist asset manager which
has the effect of delivering a predictable and high ROE of 22%.
While 15X is not a bargain these could easily be 18X. This is one to own.
The smaller emerging version is Gresham House
Brothers – Trading Statement
Disclosure: No holding
Trading is referred to as “solid”. Loan book up 3.6% year to date. Impairments
remain low and NIM in line with 2018. In asset management client assets
were up 4% between January and April. Winterflood trading is in line with
Forecasts anticipate 1% EPS growth to July 2019
PER 10.7X Yield 4.5%. Price/Book 1.7X for ROE of 16%
company is looking like a reliable annuity. Essentially reining in
lending by calling the cycle doesn’t make for a strong investment case.
Which is why someone with a different view may take it out given the SOTP
valuation is above £20. This company imbues feelings like I once had
about Latin homework.
Group – Pre Close Update
Disclosure : No holding
in Q4 was subdued which has picked up in May. FY revenue is £475m and PBT
for the year expected to be £190m (FY E £198m). The subdued
conditions were driven by ESMA OTC leverage revenues down 26%,. The 43p
dividend will be maintained which is just covered
While the year to March 19 is a little behind expectations it is possible
that the 8% PBT increase forecast for the current year could prove to be
10X yield 9.1%. Plus 500 trades on 5X and yields 15%.
This may be the eye of the needle. Brave investors may go to the strategy
presentation at 4pm today to gain the necessary confidence as to whether
this is the bottom. The shares were 893p a year ago. It wouldn’t surprise
me if they were back there a year from now.
It was the interest rate reduction between August 1998
– July 1999 from 7.5% to 5% that drove the internet bubble. With rates now
at 0.75% there is room for valuation still to go further
While inflation expectations remain low – and declining
But in inflation adjusted terms we have had a
bubble. It just didn’t feel like a boom.
Group – Pre Close Update
: No holding
Revenue ahead of expectations at £52.4m (2018 A £34.8m). Within the growth
of this acquisitive business organic growth is reported to be 15%.
PBT £9.7m (2018 £4.8m) and net debt below expectations at £14.1m.
The 4 acquisitions made during the year are trading well
The beat is a modest one. Going forwards 36% revenue growth is expected
which translates to 75% EPS growth from a 19% operating margin
17.4X yield 0.2%. EV/Sales 4.2X
The company made its 4 acquisitions at 1.2X – 2X revenue. With such a
large arbitrage between public valuations (4.2X revenue) and private ones
the acquisition opportunity is substantial. At this early stage of
the quoted legal market development this is a sector not to be avoided. At
some stage that arbitrage window will close. That will be the time to
Standard Finance – AGM update
Branch based loans have opened 7 new stores bringing the number to 73.
Guarantor loans continues recent trends, For clarity the March results
showed 60% loan book growth and impairments growing to 20%. While
loans at Home is increasing its returns as the company shifts the loan
book to a shorter duration. Which has been Morses Club strategy for many
Not expected to change
PER 7X yield 7%.
the terms of the bid NSF will issue 2.26bn new shares. If the dividend was
maintained at the anticipated level of 3.74p per share this would cost
£84m which in the context of Provident’s anticipated £130m PBT in 2019
looks sustainable. The shares are very cheap.
Advice Bureau – AGM update
AR numbers are up 5% year to date while the company cautions that the
longer time taken for housing transactions to complete has impacted the
timing of the banked revenue. However they say the majority of their AR’s
have strong growth expectations for the current year.
The 10% expected revenue growth this year sounds like it could be a little
aggressive. With a 95% dividend payout ratio this could cause concerns
over the dividend. The accounting policy for revenue states that revenue
is accounted for when it is guaranteed to be received so the banked
revenue referred to is also likely to be accounting revenue.
20X yield 4.5%
This share is priced like an annuity. If there is uncertainty over the
estimates it is certainly 20% too high.
– Metro Bank completed a £350m fund raise at 500p last night to bolster
its Tier 1 capital. It also announced £70-£75m opex savings and £40-£45m
capex savings from flexible store formats. I guess the dog bowls in stores
may be at risk. This company has lost 85% of its value in the last 12
months. This is the risk for the high growth and highly valued lenders.
Funding Circle has lost 40% of its value since IPO on the back of the loan
book performance deteriorating. There isn’t sufficient disclosure
here to split the marketing costs into the broker payments and
discretionary advertising so we can anticipate how long their £300m of
cash will last them in the event of weaker loan book performance but at
4.5X sales there remains planet of downside.
announces a tender offer to return £5m to shareholders at 92p per share
following its sale of its Zopa holding for £44m . Share Price is 88p
season is getting going now. Expected news nest week:
Financial – Trading Update.
plenty of rhetoric about NSF
Brothers – Trading Update
Expect more of the same
Capital – FY
Expect strong AUM growth
Bank – H1
Still stuck with Buy 2 Let
Will they escape without a fund
Similar to Integrafin but we
haven’t had their March AUM update yet
Bell – H1
On 55X it may be hard to not
run into profit taking
– H1 Results
of £34.4bn as previously announced represents a 15.6% increase over 6
months. Revenues up 6.7% to £47.6m and PBT up 19.8% to £22.4m. EPS up 25%
to 5.5p. Net assets are £101m of which £88m are tangible.
Outlook is confident.
H1 revenues are 48% of FY revenues so estimates look sound.
31.6 yield 2.1%
The growth outpaces the 2% margin contraction so this looks like a long
term market leading compounder. I find the statement in their annual
report that there is no LTIP “because it encourages dysfunctional behaviour”
encouraging that this is a tightly run business. Expensive but
likely to stay expensive.