Mattioli Woods– H1 Results

Share Price 840p

Mkt Cap £225m

Conflict Disclosure: No Holding

  • Results Revenue up 3.8% to £30.3m. PBT up 7.1% to £6m but up 9.2% to £7.1m at the adjusted level. Adjusted EPS up 8.1% to 21.4p and interim dividend up 15.3% to 7.3p. Cash £20m. Total client assets are flat at £9.4bn though discretionary was up 3.8% to £2.7bn. Outlook is “in line”.
  • Estimates Anticipate 9.2% revenue growth and pre tax profit of £13.7m to May 2020. Going forward PBT growth is expected to fade to 10% in 2021 followed by 5%. ROE having been in decline for a number of years is now expected to start to increase to 13.3%
  • Valuation PER 20 Yield 2.6%
  • Culture The analyst meeting is one of the best attended as the passion exuded is always invigorating. So it is a surprise to see a poor Glassdoor score of 3.3. Interestingly some of the reviews say the culture has changed over the last 7 years as the company is larger and has become more fragmented. Growing pains I wonder.
  • Conclusion The company has perhaps been going through a period of indigestion as the ROE has been declining and growth stagnating.  It may be starting to improve again with further acquisitions planned and growth resuming but the rating is taking a lot on trust.

K3 Capital – H1 Results

Share Price 248p

Mkt Cap £104m

Conflict Disclosure: No Holding

  • Results Revenue of £8m and adjusted EBITDA of £3.5m which is a useful increase on last year’s £3.1m. EPS up 7% to 6.25p. DPS up 3% to 3.7p. EBITDA margin of 44% evidences the presence of some IP. The all important outlook refers to record WIP, welcoming the general election result. A 57% increase in the volume of buyers and a 26% increase in offers bodes well. The company also refers to potential acquisitions.
  • Estimates Full Year EBITDA is forecast at £7.5m, anticipating £4m in H2. This compares to the weak H2 last year when £1.9m EBITDA was delivered.
  • Valuation The PER of 17.5 is relatively high but with lumpy revenues this is more a play on earnings than a valuation play. Yield 4.6%.
  • Culture The company has a motivated “eat what you kill” culture and scores a good 4 on Glassdoor. Reviews include a “fun” environment with the free fruit, coffee and the early finish on Fridays.
  • Conclusion This is a company in structural growth but with lumpy revenues. As it gains scale the lumpiness will reduce.  This could be a good year and it may be reasonable to expect upgrades over the year. Despite recovering 60% since the election it may not be too late.

Numis – AGM

Share Price 289p

Mkt cap £308m

Conflict Disclosure: No Holding

  • Results  Revenue is in line with management expectation and “materially” ahead of last year. Transaction volumes in the first 4 months of the year are in line with the prior period but the pipeline sounds swollen. Private Transactions are said to have delivered a meaningful contribution. Oultook is “well placed”
  • Estimates September 20 revenues are expected to be 12% higher at £125m with EBIT of £20.6m which is considerably lower than the £34.8m delivered in 2017.
  • Valuation The PER of 25X is anticipating better earnings. Yield 4.2%
  • Culture With a generous incentive plan incentivising the joint CEO’s against share prices from 209p to 509p it is surprising to see such a high employee review score of 4.7 on Glassdoor.
  • Conclusion It will probably have a good year like K3. The shares are up 27% since the November low. There is more money to be made from K3.

jeremy@charltonillingworth.co.uk