News

  • MJ Hudson issued their 10 day notice yesterday.
  • Guarantor loans At 1.57pm yesterday Amigo announces it had received the outcome of the FCA’s Guarantor Review, which effectively gave the guarantor market the all clear subject to some enhancements to be made to the customer journey. The shares were down 3.4% on the day and at 60p trade on a PER of 3.6X and yield 15% from a 1.8X covered dividend. Non Standard Finance was also down 0.6% on the day and trades on a PER of 5.6X with a yield of 12%. Perhaps the market doesn’t believe the estimates.
  • City of London Group appoints a CFO and CRO to its Recognise subsidiary ahead of the planned bank launch in 2020. The CFO is ex Aldemore and the CRO is ex Dunfermline Building Society and Newcastle Building Society.
  • Rathbones acquires the Court of Protection business of Barclays Wealth. 600 clients and 10 staff transfer over. No numbers given

Premier Miton Group – FY Results

Share Price 168p

Mkt Cap £266m

Conflict Disclosure: I Hold

  • Results This is effectively Premier results as the merger occurred on 14 November. AUM of £6.6bn was modestly down over the year from £6.9bn with net outflows of £233m. Revenue was close to flat at £48.66m representing an average fee margin of 72.3bps. Underlying PBT was £19m (2018 £18.9m) and underlying EPS was 15.99p (2018 14.66p). Cash was £20.7m and EBITDA margin 39.5%. Outlook is well positioned for future growth.
  • Estimates The result looks to be ahead of consensus. Numis had £18.1m in for 2019 and £19m was delivered. A 35% increase to £24.5m is expected in 2020 which is a reduction in EPS to 13.3p before £9.8m of exceptionals.This assumes net outflows of £840m and market performance of £729m. Over the subsequent 2 years EPS is expected to increase to 18.4p assuming 1.4% net inflows in 2021 and 6% in 2022.
  • Valuation PER 12.6X, Yield 6.3%. EV/AUM 4.7%
  • Conclusion The PER falls from 12.6X to 9.1X over the next two years on modest assumptions. This has been year of weaker performance and net outflows. If investors believe performance and flows can recover there is significant upside.

XPS Pensions – H1 Results

Share Price 126p

Mkt Cap £258m

Conflict Disclosure: No Holding

  • Results. Revenue up 8% to £56.3m. Adjusted EBITDA up 11% to £13.3m. PBT £4.4m and adjusted EPS down from 4.2p to 4.1p. DPS flat at 2.3p. Outlook anticipates full year in line with expectations. New business pipeline is said to be healthy. Net debt £76m. Net tangible assets are negative
  • Estimates. Full year EPS is expected to be flat at 9.8p and then is expected to rise 6% in 2021.
  • Valuation PER 12.9X, yield 5.2%
  • Conclusion This stock bears all the hallmarks of a low growth business which has been leveraged by private equity and dressed up as a growth business for the stock market. The yield has some attractions but the rating looks up with events.

Ince Group Plc  – H1 Results

Share Price 120p

Mkt Cap £44m

Conflict Disclosure: No Holding

  • Results Revenue up 125% to £45.3m and PBT £4m. EPS 6.3p with 2p DPS. Net debt was £10.4m. Organic growth reported at 5.3%. Outlook is confident and the £100m revenue target is reiterated. The company has 378 fee earners representing revenue/head in H1 of £119k (2018 £122k). The adjusted PBT number of £4m however is £10.7m in statutory terms less the £7.1m profit share and acquisition costs of £461k. This implies it includes the £3.9m negative goodwill on acquisition.
  • Estimates. Full year estimates assume £94m revenue, below the £100m target and £11m PBT.
  • Valuation. PER 5X Yield 6.3%. 0.5X revenue
  • Conclusion On a PER basis the shares are cheap but the gain on bargain purchase is not a repeatable profit. The PAT attributable to shareholders is £1.9m which includes a one off bargain purchase gain. I can’t trust the profitability of the trading business.

Amigo Holdings – H1 Results

Share Price 60p

Mkt Cap £285m

Conflict Disclosure: No Holding

  • Results Loan book up 8.8% to £731m and revenue up 11.8% to £145m. Impairments up sharply to 31.1% of revenue (2019 H1 23.3%) and cost income ratio up to 20.8% (2019 H1 23.3%).  Adjusted PAT down 24.2% to £35.8m. EPS 7.5p. Leverage is 2X. The outlook statement refers to addressing capacity constraints in the business and guidance for the full year is unchanged. 85% of the loan book is up to date (2019 H1 88%)
  • Estimates Year to March 2020 £97.8m PBT is expected and 16.8p EPS with a 9.1p dividend.
  • Valuation On March 2019 numbers the PER is 3.6X and yield 15%. Tangible equity is c. £240m, a little below the £285m market cap.
  • Conclusion It appears the market is not keen on this one trading at a PER of 3.6X. I expect these results may provide some reassurance that despite the issues it is extremely cheap.

jeremy@charltonillingworth.co.uk