Hits: 81

News 

  • Amigo – Yesterday announced the board wishes to recommend a £100m bid conditional on approval of the 60% shareholder but the board has been unable to ascertain the willingness of the 60% shareholder to accept or not. £100m for a £722m loan book backed by £245m equity which made £111m profit last year is unusual.
  • BooHoo responded to the short seller criticism yesterday saying the recent £200m to persue “numerous opportunities” that are likely to emerge in the fashion industry. Then today announces the acquisition of the 34% minority in Pretty Little Thing for an initial £269m which is owned by the founders son.
  • The compensation table for the CFA institute surprised me. Head of HR gets $500k for looking after 650 people, as does the head of IT. 

 

Charles Stanley  – FY Results

Share Price 274p

Mkt Cap £141m

Conflict Disclosure: No Holding

 

  • Update AUMA down 16.2% over 12 months and revenue up 11.5% to £173m. Underlying PBT up 45% to £19.3m representing a 11.7% margin. EPS up 47% to 31.4p and DPS of 9p for the full year (+3%). Cash £93m. Outlook is positive beyond the challenges posed by COVID 19 and markets. It anticipates short term challenges will significantly reduce revenue. Investment management delivered a 15% operating margin, Charles Stanley Direct 16.8% but financial planning continues to lose money. The loss in planning is said to be the result of hiring planners that take up to 24 months to reach full productivity. 
  • Estimates  Results are in line at the revenue level but the £19.3m PBT is significantly ahead. A 6% revenue decline in 2021 is currently forecast which given the company expects a “significant” impact on revenue from COVID 19 looks too high. 
  • Valuation PE 15.3X. Yield 3.4% on current forecasts. On EPS just delivered PE is 8.7X. If we assume £160m revenue and impute the 15% target margin we get £24m PBT which is c 38p EPS. PE is 7.2X potential which may take 2 years.

 Conclusion The arduous road to 15% margins now looks visible and its down to the financial planners. 8.7X historic results is too low. Brooks Macdonald trades at 13X. That’s 50% higher. The 13% rise in IPF yesterday makes me wonder if value could possibly matter once again.

 

Leave a Reply