AFX/CBP/MJH

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  • Growth Street, a peer to peer working capital finance provider declared a liquidity event yesterday, closing investor access.
  • Morses Club reassured on its trading update pre the close after the shares fell 60% at one point in the day. This reassurance should have been included in the original announcement of the CFO departure. The share closed down 18%, but with a £49m market cap and PBT of c £16m this year it is a reminder that these markets will deliver some bargains.

Alpha FX – FY Results

Share Price 870p

Mkt Cap £323m

Conflict Disclosure: I Hold

  • Results Revenue up 51% to £35.3m. Underlying operating profit up 51% to £14.7m. Reported operating profit £13.7m. EPS up 33% to 30.1p. Client numbers grew 34%, revenue per client up 12% and staff numbers up 51% to 124. Canada is expected to report a profit in Q1 2020 and an Amsterdam office is now planned. Net cash is £38.6m. The company reports limited impact from COVID 19 so far and since December Alpha reports trading in line with expectations.
  • Estimates Results are in line with expectation upgraded on the pre close update. Current year forecasts are for 20% PBT growth.
  • Valuation PE 24X for 2020 and FCF yield 4.1%. Div yield 1%.
  • Conclusion The shares are down 37% from their highs. At this young age of development this looks like an expensive but scalable cash generating machine. One for the long term.
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MJ Hudson – H1 Results & Acquisition

Share Price 56p

Mkt Cap 95m

Conflict Disclosure: No Holding

  • Update Underlying revenue growth of 25.8% to £10m. Adjusted PBT £0.3m. EPS 0.3p. Net cash £20.1m. The company reports a busy M&A pipeline. Outlook is cautiously confident without ignoring the COVID 19 risk. The company reports the acquisition of Meyer LLC, a marketing services and analytics business with a staff of 8 in New York and Vancouver. No numbers provided save it will be marginally EPS enhancing in its first full year.
  • Estimates FY revenue to June is expected to be £22m and PBT £1.2m.  These are expected to grow 23% and 260% to £4.3m to June 2021.
  • Valuation With £20m net cash the EV/EBITDA is 18.3X falling to 11.5X.  PE 118X falling to 25X
  • Conclusion The company appears to be doing what it says on the tin. Trading close to the 57p IPO price in December these markets may test whether the forward looking valuation can be sustained.
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Curtis Banks – FY Results

Share Price 197p

Mkt Cap £107m

Conflict Disclosure: No Holding

  • Results Revenue up 6% to £48.9m, adjusted PBT up 11% to £13.4m delivering an operating margin of 28.1%. Adjusted EPS up 10% to 19.4p. While gross organic growth in own SIPP numbers is reported at 7% but the attrition rate exceeded this. Total number (including third party administered) fell 1.5% to 76,541. The commercial property services is reported to be profitable in its first full year. DPS 9p. Outlook says 2020 started well but COVID 19 creates uncertainty for the remainder of the year.
  • Estimates Results are in line with expectations. Going forward PBT growth of 9% is expected which with lower SIPP numbers (the company charges per SIPP) may be aggressive.
  • Valuation PE 9.6X Yield 5%
  • Conclusion The shares are down 55% from their high.  While the revenue is relatively sticky it also has an ex growth look, which would suggest the 5% yield and low PE is appropriate.

jeremy@charltonillingworth.co.uk