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Daily Grime - HAT; AMGO; GHE

Published 27/01/2020, 10:50
Updated 09/07/2023, 11:32

  • There was a loud sound of stable doors closing last week as the FCA wrote to fund managers outlining the risks of liquidity, conflicts of interest with ACD’s, and governance.
  • Randall & Quilter acquires a Montana Captive. No price or NAV is disclosed. The statement says the company has a strong pipeline and looks forward to closing more transactions in “coming weeks”.
  • Amigo Holdings (LON:AMGO) – Strategic Review

    Share Price 68p

    Mkt Cap £323m

    Conflict Disclosure: No Holding

  • Statement Richmond Group (the 60.7% shareholder) is a willing seller and so the company has launched a “strategic review”. The company confirms trading is within guidance for loan book growth and impairments to Dec 2019. Bids are to be submitted by 17 February.
  • Valuation I don’t recall seeing a company trading on a PER of 4.3X and yielding 14% being put up for sale by its majority shareholder before. Price/NTAV is 1.3X. The only quoted comparator is NSF which trades at 1.7X Price/NTAV with a PER of 7.5X yielding 10%.
  • Conclusion Perhaps NSF may have a look but I imagine the CMA may need to be involved if NSF was to bid for the largest player in the guarantor loans market hampering their chances. Private equity is the natural buyer but with the regulatory uncertainty over the sector the price is unlikely to be glamorous. Notwithstanding that a PER of 4.3X is a low starting point. The shares could double without looking expensive. But investors at 275p in the July 2018 IPO may feel duped.
  • Gresham House PLC (LON:GHE) – Trading Update

    Share Price 650p

    Mkt Cap £181m

    Conflict Disclosure: I Hold

  • Update This company doesn’t give quarterly updates so the period covered is 12 months to Dec 2019. AUM was up 20% to £2.75bn. Financial performance is “in line”.
  • Estimates £28.7m revenue is expected for 2019PBT of £7.8m to Dec 2019 delivering £9.2m pre tax profit and 27.5p EPS.is expected, growing to £9m in Dec 2020. EPS 8.7p and a 5.2p dividend. The total dividend for 2019 is expected to be 5p, ahead of the 4.8p forecast.
  • Valuation EV/AUM 5.8%. PER 23.6X Yield 0.6%. Expensive but cheaper than Impax on 31X.
  • Conclusion The bulk of the AUM are held in closed ended funds with an average life of 16 years making the funds very sticky but harder to grow. For this reason it fits the “buy and forget” box. The shares are expensive but at a relatively small scale of £2.75bn of AUM there is considerable upside over time.
  • H&T Group Plc – Trading Update

    Share Price 365p

    Mkt Cap £94m

    Conflict Disclosure: No Holding

  • Update Full year PBT is expected to be at the top end of expectations. 39% Pledge book growth to £71m. Retail was up 7% and FX income up 45%.
  • Estimates 33% PBT growth shows as consensus to £17.9m so this looks like a 5% -10% beat. 24% growth is expected for the 2020 year.
  • Valuation ROE is 11% and Price/book 1.3X. 2020 PER is 8 and yield 3.3%
  • Conclusion The sector is in one of its halcyon periods when the gold price rises, consolidation opportunities arise and there is plenty of demand. At the same time FX is growing strongly for Ramsdens. Without structural growth this is not a “forever stock” but not often can we buy a 24% growth stock on a PER of 8X. There should be another upgrade and perhaps 30% to go for on the share price yet.

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