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Daily Grime - Liontrust (LIO), Argentex (AGFX), Alpha (AFMC) Results

ByJeremy Grime
Published 20/11/2019, 08:35
Updated 09/07/2023, 11:32

Liontrust Asset Management (LON:LIO) – H1 Results

Share Price 896p

Mkt Cap £491m

Conflict Disclosure: No Holding

  • Results Adjusted PBT up 17% to £17m. AUM at 18 November has increased a further 3% from 30 September to £17.9bn. With performance consistently strong across the funds and net inflows top of the charts there is little to see here. Except for the stripping out of the £4.5n share incebtivisation expense of £4.5m and the costs relating to consolidating the fund services provider to BONY of £1.4m. It could be argued they are ordinary costs of running the business. Outlook is confident of continued momentum.

  • Estimates PBT of £38.3m is expected for the full year. This looks in line with the £17m delivered in H1 and the acquisition of Neptune at the end of H1 adding 18% to AUM.

  • Valuation PER 15.8X Yield 3.6%. EV/AUM 2.5%

  • Conclusion. The valuations of the fund managers vary modestly, generally trading at 14-17X earnings, while the prospects vary hugely. The prospects for Liontrust are outstanding and it is therefore the one to own. Annoyingly I don’t

    • Argentex (LON:AGFX) – H1 Results

    Share Price 173p

    Mkt cap £196m

    Conflict Disclosure: No Holding

  • Results Revenue up 41% year on year to £13.8m. Adjusted PBT £4.3m, equating to a margin of 46.2%. The company now has 932 active corporate clients with 210 new ones signed in the period. The increase in FX turnover was a modest 16% relative to the 41% increase in revenue, suggesting that the spreads have widened. Cash is £32m and the outlook is excited.

  • Estimates. Upgrades are 21% from the house broker Numis today. EPS goes from 7.1p to 8.7p for March 2020 and from 8.9p to 9.2p next year. Quite how 6% EPS growth can be forecast for next year when revenue growth is running at 41% currently is beyond me. Upgraded forecasts assume 4% revenue growth in H2 after 41% in H1. This looks too low by perhaps 30%

  • Valuation PER is 24.3X before 20% upgrades. Yield 1.2%. Given upgraded forecasts may well be 30% too low the shares are probably cheap.

  • Conclusion These shares are the wrong price because forecasts are far too low. A similar argument applies to Alpha FX which allegedly trades on a PE of 40X.

    • Alpha Financial Markets Consulting (LON:AFM) – H1 Results

    Share Price 193p

    Mkt cap £199m

    Conflict Disclosure: No Holding

  • Results Revenue up 9% to £42.9m and EBITDA up 12.4% to £9.5m. EPS up 10% to 6.82p. Net cash £17.1m. As the company continues its global roll out the number of clients has increased from 252 to 350 over 12 months. US revenues grew 38% and new offices were opened in Denmark and Canada. Outlook is in line with expectations.

  • Estimates Forecasts anticipate £10m of EBITDA in H2 against £9.5m in H1.16% PBT growth in 2021 fading to 9% in 2022.

  • Valuation The PER of 13.8X and yield of 3.6%

    • Conclusion This is not a high growth underlying business but the global roll out coupled with the acquisition strategy have the potential to produce good returns, and the shares are reasonably valued. This looks like a GARP stock for the next few years.

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