Hits: 10

30 April 2020

Cenkos – FY Results

Share Price 48p

Mkt Cap £27m

Conflict Disclosure: No Holding

 

  • Results Revenue of £25.9m delivered a modest profit of £100k. Cash was £18.9m, which compares to £23.9m on 1 April 2020 while NAV was £24.7m. Outlook is “tempered optimism” with some significant transactions already delivered this year. There is a 1p final dividend for 2019.

 

  • Estimates PBT has varied between £100k and £27m in the last 6 years. Having just delivered £100k my bet is with all the refinancing requirements it could be quite a bit more this year.

 

  • Valuation 9% premium to NAV and 11% premium to TNAV

 

  • Conclusion The maintenance of the dividend is a sign of confidence in this turbulence.  The profits have varied from £27 to £100k over 6 years and the share price has varied accordingly from 243p to 31p. At 48p there is significant upside should profits improve.

3 April 2020

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Cenkos – COVID 19 Update

Share Price 40p

Mkt Cap £22m

Conflict Disclosure: No Holding

  • Update Results are being deferred following the general FCE request. Results expected to be in line with 18 February update which is to report a profit for the year after £1.4m of exceptional costs. Cash at 1 April was £23.8m.
  • Balance Sheet The last reported NAV was £25.9m, most of which is in cash at 1 April.
  • Valuation 5% discount to NAV and small discount to cash.
  • Conclusion This is the time to own these stocks as there could be a reasonable amount of rescue funding to do further down the line. Numis for the more risk averse investor and Cenkos for the higher risk/return investor.

18 February 2020

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Cenkos – Trading Update 

Share Price 61p

Mkt Cap £35m

Conflict Disclosure: No Holding

  • Update Cenkos announces £1.4m in restructuring costs which reduces the annual fixed cost base by £3m. After taking into account the restructuring costs the company was profitable in H2 and expects to be profitable for the full year to Dec 19. In H1 a modest loss of £200k was reported. The company is encouraged by the strength of its pipe. Lisa Gordon to be appointed as non-exec chair.
  • Estimates Forecasts are for £29.5m revenue in 2019, rising to £37.5m in 2020 which provides £3.5m PBT. The only certainty is the 2020 forecasts are wrong.
  • Valuation At the half way mark NAV was £25.9m so the shares trade at a £10m premium to NAV.
  • Culture Some Glassdoor reviews call it a meritocracy. Others are less flattering. However, the unique culture perhaps makes it difficult to scale.
  • Conclusion Having produced £27m PBT back in 2014 this is a bet as to whether markets and this company can regain its former position. With Woodford now out of the stock and the former management team having returned it may be a reasonable bet.

18 September 2019

Cenkos – H1 Results 

Share Price 45p

Mkt Cap £25m

Conflict Disclosure: No Holding

  • Results – Cenkos reports its first loss since listing off H1 revenues of £10.6m. However the statement says H2 has started well. Cenkos has done 2 of the 7 AIM IPO’s year to date. 110 corporate clients is sufficient scale to be profitable in normal market conditions.  Joe Nally and Paul Hodges come off the board but remain on the executive committee
  • Estimates – None
  • Valuation – Net assets are £26m.  Currently there is no return on those assets.
  • Conclusion – It is no surprise that markets have been quiet in H1.  The call is whether this is a cyclical change or a structural change. My personal view is that AIM has restricted the number of Qualified Executive’s and so price inflation for IPO’s together with aversion to illiquidity and reduced commission resulting from MIFID 2 is causing a structural change. This may be the reason that Oliver Hemsley is taking a look at Zeus.  They will need to move into private company transactions which aren’t mentioned in the statement. In the absence of that NAV may be a full valuation.

8 January 2019

Cenkos  

Share Price 68p

Mkt Cap £38m

  • Crowdfunders Seedrs announced it had raised £195m over 2018 yesterday with 186 successful raises. If we assume 5% fees from money raised that would produce revenues of close to £10m which compares to £2m of revenue in the year to December 2017.  With admin costs of £5.8m in 2017 the company lost £3.9m. This amount of fund raising could well out Seedrs close to profitability.  In October 2017 Seedrs raised £6m on its own platform which valued the company at £50m which is some 5X current year revenue.
  • Track Record Cenkos reported £18m revenue in H1 2018 compared to £60m revenue for the year to Dec 17 and is capitalised at £38m of which balance sheet cash may be in the region of £30m.  Over the last 6 years the company has reached £88m revenue in 2014 while and never made a loss. Dividends since 2012 have been 61p while the share price is 68p.
  • Conclusion For the intrepid profit hunter Cenkos looks an interesting value situation while valuations on Crowdfunding sites appear to be full.

12 December 2018

Cenkos

Share Price 63p

Mkt Cap £35m

  • News – CFO is to leave in March 19. A search for a replacement will be conducted. This follows Jim Durkin returning as CEO. Today there are a number of change of adviser announcements as the acquisition of Smith & Williamsons NOMAD operation completes.
  • Estimates – There is no vivibility of broker earnings which remain lumpy. Over the last 6 years revenue has ranged from £43m to £76m while profits have ranged from £2.5m to £15.4m.
  • Valuation – Net assets at June 17 were £26m of which £22m was cash.
  • Conclusion – With the franchise building from the acquisition and new management this could be an interesting recovery situation. The only question is will investors be able to buy the stock at NAV which is still 25% below the current level.  It seems results in march may not read well. That could be the opportunity.

21 September 2016

Cenkos  Interim Results – Weak H1  

Share Price £1.15

Mkt Cap £65m

·         Results  Revenue was £15.3m against £53.1m last year.  PBT was £1.7m against £18.6m and EPS was 1.2p against 26.1p last year. Net cash is £20m against £48m last year. In H1 last year the company raised £1bn for BCA Marketplace which underlines the lumpy nature of the revenue. Funds raised on AIM overall are reported to be 30% down on last year.

·         Valuation The company has made a profits varying from £3.8m to £27.5m between 2006 and 2015 and has paid more in dividends than the current market cap

·         Conclusion  There are limited buyers for such a lumpy business which is reflected in a very cheap valuation.  I can only think of two brokers that haven’t made losses in the last 10 years.  As competitors fall by the wayside in tough markets the value of the corporate relationships that the company has will increasingly become apparent in an improving valuation.  This is a good time to acquire the stock.  The CEP bought a little early at around £1.50