6 November 2019
WH Ireland – H1 Results
Share Price 49p
Mkt Cap £21m
Conflict Disclosure: I consult for the company
- Results Revenue down 11% to £11.36m and costs down 17% to £12.25m. Loss reduced from £2.1m to £1.35m. At the segment level Wealth Management contributed £1.6m and Institutional broking contributed £349k while central costs amounted to £3.17m. Net assets are £7.4m while cash is £4.1m. The company announces an accelerated book build for £2.5m this morning. The outlook refers to further cost reductions and monthly profitability expected by the new financial year which is April 2019.
- Estimates No forecasts in the market
- Valuation The AUM of £2.3bn is 48% discretionary (£1.1bn). If this was valued at 3% that is £31m, 47% ahead of the current market cap. Assuming institutional broking and the non discretionary AUM are worthless.
- Conclusion It is possible the business won’t reach break even by April next year but the clear statement suggests the company may have visibility on that. Or it is possible they may lose some more AUM on the way to profitability, but it appears if the company achieves its aspirations there is significant upside.
6 March 2019
W H Ireland – Placing
Share Price 37p
Mkt Cap £11.8m
- Placing Yesterday they raised £5m to bolster the balance sheet in the light of losses which last year were £4.1m. I suspect they can add to revenue from some repricing initiatives and take something out of costs. while the issue of regional sub scale offices remains.
- Valuation The company has £3bn of AUM. This may not be high quality discretionary AUM but has a value. The corporate broking business has 82 corporate clients. Stockdale had 53 corporate clients and recently sold itself to Shore Capital for £8.9m. If WH Ireland’s 82 corporate clients are worth the same as Stockdale’s 53 then that values the £3bn of private client AUM at 10 bps.
- Conclusion This is an asset at an eye watering valuation. Such is the valuation when a broker makes losses. The upside when this company reports a profit is many multiples.
19 July 2018
WH Ireland – New CEO and FY Results
Share Price 128p
Mkt Cap £38m
· News Richard Killingbeck is stepping down on 31 July to be replaced by ex Panmure CEO Phillip Wale. Results are for a 16 month period but on an annualised basis revenue of £36.4m represented a 7.5% increase. The underlying operating loss was £1.6m while a further £2.5m of exceptionals were incurred bring the reported loss to £4.1m. Net asset value is £12.9m of which £3.7m is intangibles. Cash is £7.3m. Corporate Broking contributed a profit of £390k (2016 loss 615K) while wealth management lost £3m (2016 £1.3m). AUM in wealth management totalled £2.5bn of which £1.1bn was discretionary
· Valuation If we value the £1.1bn of discretionary AUM at 3% we get £33m. The balance of the AUM must be worth something and there is close to £9m of tangible net assets of which £7m is cash. Its not difficult to justify a £50m valuation if we can see a way to making the wealth management business profitable while the corporate broking business is profitable under the leadership of Adam “VR pod jockey” Pollock.
· Conclusion There is significant value here and a new CEO as a catalyst to get the company the company profitable. It may need some M&A activity to achieve the scale and quality required in the wealth management business. The next couple of years could create significant value.