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Daily Grime - AFH Financial (AFH); Cenkos (CNKS)

ByJeremy Grime
Published 18/09/2019, 10:21
CNKS
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AFHP
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News-

  • H&T gets a new executive director from Grosvenor Casino’s. With Albemarle & Bond closing their 116 stores at the week end and gold price strength things, I imagine, are going well in the pawn world.

    • GLI Finance reports a £6.1m H1 loss, partly as a result of a £5.2m write down on the fintech ventures portfolio, although the Sancus BMS business also reports a pro forma loss. The company reports £44m NAV although if we write down Fintech ventures to zero and exclude goodwill the tangible NAV is £12m against a market cap of £10m while the company is negotiating how it will repay the remaining £16m of zero preference shares repayable by the end of the year.

    AFH Financial (LON:AFHP) - Acquisition

    Share Price 291pMkt Cap £124mConflict Disclosure: No Holding
    • Acquisition –Broadleaf Financial, based on the Wirral is acquired for £3.2m. The only disclosure is £140m FUM. 2.3% FUM appears in the face of it a reasonable price. Since the £15m convertible issue the company has committed £10.4m to acquisitions.
    • Valuation – PE is 9.5X October 2019. Harwood Capital trades at 14X October 2019.
    Conclusion -

    The convertible issue has triggered a strong derating perhaps on the perception that equity appetite has exhausted. This is looking like an opportunity

    Cenkos (LON:CNKS) – H1 Results

    Share Price 45p

    Mkt Cap £25m

    Conflict Disclosure: No Holding

  • Results – Cenkos reports its first loss since listing off H1 revenues of £10.6m. However the statement says H2 has started well. Cenkos has done 2 of the 7 AIM IPO’s year to date. 110 corporate clients is sufficient scale to be profitable in normal market conditions. Joe Nally and Paul Hodges come off the board but remain on the executive committee

  • Estimates – None

  • Valuation – Net assets are £26m. Currently there is no return on those assets.

    • Conclusion – It is no surprise that markets have been quiet in H1. The call is whether this is a cyclical change or a structural change. My personal view is that AIM has restricted the number of Qualified Executive’s and so price inflation for IPO’s together with aversion to illiquidity and reduced commission resulting from MIFID 2 is causing a structural change. This may be the reason that Oliver Hemsley is taking a look at Zeus. They will need to move into private company transactions which aren’t mentioned in the statement. In the absence of that NAV may be a full valuation.

    JTC Group – H1 Results

    Share Price 475p

    Mkt Cap £452m

    Conflict Disclosure: No Holding

  • Results Revenue up 32% to £46.6m. Underlying EBITDA up 35% to £14.3m which is a healthy 30.6% EBITDA margin. Net debt is £60.9m, which is a full 1.9X pro forma EBITDA. Organic growth calculated at 8.2% and new business enquiry pipeline of £33.1m. Outlook is confident for 2019 and beyond.

  • Estimates Full year PBT of £28.5m is anticipated, EPS 22.5p, from which a 5.3p dividend is expected.

  • Valuation PER 21X Dec 2019, yield 1.1%

    • Conclusion These are good results. I really don’t see the structural growth the company refers to so regard this company as an acquisition machine engineering organic growth from cross selling. Consequently with a leveraged balance sheet there could either be a placing or growth slows. I would be saying thankyou for the 45% share price appreciation this year.

    Personal Group – H1 Results

    Share Price 381p

    Mkt cap £119m

    Conflict Disclosure: I Hold

  • Results Revenue up 42% to £30m. PBT up 5.6% to £4.1m. EPS up 8.6% to 11.4p. DPS up 1.3% to 11.65p and net cash £19.2m. The £4.1m PBT is after a £542k provision release which may be non recurring. Transactional spend over the Hapi platform has increased strongly and the Saas business has increased revenue strongly while the delay in the Sage is holding back growth. The negative well as the slowing down of new business wins in the core insurance business. The new CEO’s strategy aims to double EBITDA by 2025. Outlook states that revenue and PBT are in line with expectations although EBITDA is now expected to be lower.

  • Estimates £10.4m PBT anticipated for FY 2019 which is EPS of 26.2p. Dividend 23.3p. looks full but the company says they are trading in line.

  • Valuation PER 14.5X, Yield 6.3%

    • Conclusion This company has multiple potential exciting new business streams that could transform this into a growth business. But 85% of EBITDA is derived from the core insurance business which is a cash cow. The shares are valued as a cash cow, seemingly correctly. The patient investor may be well rewarded as the company transitions but there is no catalyst today.

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