Close Brothers (LON:) –
Share Price 1455p
Mkt Cap £2,198m
Conflict Disclosure: No Holding
Update Banking increased loan book 0.9% in Q1with a stable NIM and a modest increase in bad debts. Asset Management increased AUM 1.7% to £11.9bn and Winterfoods was subdued.Estimates. 2% increase in PBT is expected for the year to July 2020. £270m.Valuation ROE anticipated in 16% and the shares trade at 1.8X book value.Conclusion. The company is so cautious it is barely growing. Which may be a time when the impatience of markets is tested and with a SOTP close to £20 it could attract predators interests. In the absence of a bid the 4.7% yield may be enough for the patient investor. CMC Markets PLC (LON:) –
Share Price 126p
Mkt cap £365m
Conflict Disclosure: No Holding
Results Net Operating income is up 45% to £102m. PBT shows a strong recovery to £30.1m (£7.2m). EPS 9.5p and DPS 2.85p. Revenue increases were driven by a small drop in the number of active clients but a significant increase in revenue per active client. The ANZ white labelling agreement has started to produce revenue with Australian broking increasing by £9m to £14.5m. Regulatory uncertainty remains in Australia with the date for the reforms not yet clear. Outlook is positive and excited.Estimates. FY estimates to March 2020 seem to anticipate £35m PBT which is way too lowValuation The PER of 11.1m is based on forecasts that are way too low.Conclusion Earnings could double from the current forecasts over the next 1-2 years. I imagine the share price could do at least that too.Charles Stanley (LON:) –
Share Price 255p
Mkt cap £130m
Conflict Disclosure: No Holding
Results FUMA increased 2.1% over 6 months to £24.6bn while Discretionary AUM were up 6.1% to £13.9bn. Revenue margin was 70bps, up from 62.9bps benefitting from re pricing. Total revenue £85.4m. PBT increased 71.9% to £9.8m which is an operating margin of 11.2%. Outlook is confident of achieving a sustainable improvement in underlying profitability.Estimates Estimates for the full year anticipate £11m PBT from Revenue of £158m, a margin of 7.5%. This has been blown away by the £9.8m PBT achieved in H1, driven by strong revenue and higher margin.Valuation On existing forecasts the company trades on 14.2X and yields 3.5%. If we used a revenue number of £180m and imputed the target 15% margin we get £27m PBT. That is cheap for £130m mkt cap.Conclusion After a few years of failing to deliver this now looks like they could get there.Manolete (LON:) –
Share Price 510p
Mkt Cap £222m
Conflict Disclosure: No Holding
Results The words “these are a strong set of results” always fills me with fear. As if we won’t be able to tell from the numbers. Net Asset Value is £30.9m while the company has an unutilized £20m facility from HSBC. This NAV produces revenue in H1 of £7.5m and PBT of £4.3m. EPS 7.9p. Strong investment in new cases. Of the £7.5m revenue £5.6m was derived from fair value movements.Estimates FY estimates anticipate £10.2m PBT for FY to March which looks reasonable in the light of £4.3m in H1.Valuation The company achieves a c. 30% ROE so may be expected to trade at perhaps 3-4X book value which is around half the current share price.Conclusion This is a fund which achieves a high ROE because of its specialist niche and capital light model. It is priced as a growth stock. The markets tendency to confuse funds with growth stocks is what attracted the shorters to Burford. This valuation is out of kilter with reality.Knights Group (LON:) –
Share Price 331p
Mkt Cap £244m
Conflict Disclosure: No Holding
Update H1 trading is reported to be “strong” which is in line with expectations. 43 new fee earners recruited in H1. New larger Manchester offices too.Estimates FY PBT is expected to be £40.6m, EPS 10.7pValuation PER 20X yield 1%Conclusion Knights is a strong model but 20X is a full valuation for a people business.
