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12 May 2020

FRP Advisory – FY Trading Update

Share Price 117p

Mkt Cap £278m

Conflict Disclosure: No Holding

 

  • Update Profit expected to be ahead of the board’s expectations having benefitted from the administrations of Carluccios and Debenhams in the two months since IPO. Revevenue for the year to April is expected to be up 16% to £63.2m.

 

  • Estimates There are no estimates out yet but the company has made 45% operating margins last year which would imply £28m operating profit. Assuming a normal tax rate this would equate to c. 10p EPS. Woth a 70% payout ration a 7p dividend may be reasonable.

 

  • Valuation On the above assumptions the PE is 11.7X and yield 6%.

 

  • Conclusion This looks like it has IPO’s at an opportunistic time, and is cheap. If these margins are sustainable this share could become expensive in valuation terms. With a strong outlook on the insolvency/restructuring side the earnings could also grow strongly this year. Looks like a winner.