News

  • Randall & Quilter announced yesterday the launch of a PI policy aimed at freelance UK solicitors underwritten by Accredited Insurance (Europe) Ltd, underlining the company’s “beneficiary of Brexit” status.
  • Investec – small director sale seems off ahead of the demerger of the asset management business next month.

Plus 500 – FY Results  

Share Price 911p

Mkt Cap £986m

Conflict Disclosure: No Holding

  • Results  Results were pre announced in January which was a story of a weak H1 and strong H2 with EBITDA up 93% H2 on H1 FY EBITDA was $192.1m. Today the company annpounces it will distribute 100% of 2019 net profit to shareholders ($151m), $72m via dividend and $80m by share buy back. A new license has been obtained for the Seychelles since the year end and positive momentum has continued into 2020. The Board is confident. Year end cash was $292m
  • Estimates PBT of $190m was pre announced in January, a margin of 53% in these difficult times. Going forward a modest 10% PBT growth is expected to £203.4m. Given the H1, H2 split was $66m/$124m that would imply a H2 run rate of $248m which implies potential 22% upgrades.
  • Valuation PER on 2020 estimate as it stands is 9.7X, Yield 5.8%. IG trades at 16X and CMC at 9.8X.
  • Culture The glassdoor reviews suggest the office atmosphere is good but there are negative comments about poor customer outcomes. Exactly the reason for the regulatory clampdown.
  • Conclusion The shares are up 78% since their low last April. I am kicking myself for not owning them as it’s a question of following management purchases with this stock. The company continues to buy back their stock and there is still a way to go before they regain their £20 highs.  But it’s the porr customer outcomes that hold me back.

Arbuthnot Banking Group – Pre Close Update

Share Price 995p

Mkt Cap £148m

Conflict Disclosure: I Hold

  • Update Loan balances are up 31% and deposits up 22% over 2019 and the group expects to announce results towards the upper end of expectations. During Q4 the company saw a number of loan deals being delayed ahead of the general election and has since noticed an increased level of confidence in markets and its pipeline.
  • Estimates PBT of £8.5m is expected for 2019. 40% growth to £11.4m is expected in 2020.  From a NAV this still equates to only 5% ROE. However the shares trade at a 25% discount to NAV.
  • Valuation The PER is high at 20.4X but the shares trade at a 25% discount to NAV and yield 3.7%.  
  • Culture I enjoyed the staff review criticising it for being “basically Coutts”.
  • Conclusion Underpinned by NAV it is a question of how long it takes to outgrow its PER which could be another 2-3 years. One for the patient.

jeremy@charltonillingworth.co.uk