Hits: 2

Santa Rally 

  • Yesterdays warnings from Superdry and Filtronic followed hard on the heels of MySale, Primark, McColls, Carpetright, Mothercare and Thomas Cook warnings.  As we get to the end of the year it starts to become apparent when the cupboard is bare.  The retailers are featuring strongly in the profit warners currently although we are not yet at the levels seen in 2008 when a little under 50% of all listed retailers issued a warning.  Looking at the trends up to Q3 however it looks like the retailers could have a shot at the 2008 record high this year. There were 43 retailers that warned in 2008. Up to Q3 2018 we had 25 so we need 18 in the last quarter in order to trouble the record books.


Lots of trading updates today

  • Purple Bricks – reduces guidance by 2%. Share trade at 2.6X April 19 revenue
  • Bonmarche – warning
  • Ultra Electronics – in line
  • Ocado – in line

IFG Group – Trading Update

Share Price Euro 1.49

Mkt Cap £142m

  • Update – This is an interesting company for the value investor. Legacy issues remain ongoing but the company believes they have adequately provisioned for these issues.  Financial targets are helpfully set out today to 2021. Saunderson House AUA at 31 October are flat over 12 months at £5bn as market headwinds offset inflows while James Hay AUA are up 2% over the last 12 months. Inflows have slowed as the DB transfer market has slowed. This is a common feature that a number of financial advisers report after a buoyant year in 2017.
  • Estimates – The company target 7% annual revenue growth over the next 2 years at James Hay and operating margins increasing from 19% to 25% while at Saunderson House the company anticipates 9% annual growth out to 2021 with an improving operating margin. Extrapolating from 2017 results that gives an operating profit of £14m from James Hay and above £11m from Saunderson House in 2021.
  • Valuation – SOTP – James Hay may be worth 15X the £14m operating profit in 2021 which is £210m. While the £11m from Saunderson house may be worth perhaps £120m  Assume the cash on balance sheet is paid out to settle the legacy matters and we have a target market cap of £330m or 2.3X the current price.
  • Conclusion – Share will go up on this reassuring update.

Integrafin – FY Results

Share Price 272p

Mkt Cap £925m

  • Results FUD were up 18% over the year to £33.1bn on the back of strong net inflows of 14.7% over the year. Revenue was up 14% as revenue margins continue to suffer attrition and PAT was up 10.1% to £32.9m. Adjusted PAT was £35.5m. The outlook refers to the resilience of platforms in bear markets. Adjusted operating margin was 47%. Dividend is increased 10%
  • Estimates Results appear to be a little behind consensus of £36.6m of adjusted PAT while revenue is bang in line. Going forward estimates look for 14% EPS growth which potentially could be aggressive if there is a prolonged slow down in commission.
  • Valuation 12 months forward PER is 22.8X and yield 2.8%
  • Conclusion With the shares having come back from the 400p high post IPO they look to be fair value.

Tungsten Holdings -H1 Results

Share Price 32p

Mkt cap £40m

  • Results Revenue up 3% to £17.6m and an EBITDA loss of £752k. Cash outflow over 6 months was £4.5m while net cash was £2m. 
  • Estimates The company guides to FY revenues of £36-£36.5m and £34m of operating expenses so an EBITDA profit for the year.
  • Valuation The shares trade a little over 1X revenue
  • Conclusion The company is now at the bottom of the cash curve and states it has adequate capital. If this is true the shares could double but there is a large short position on the shares betting an equity raise will be required.