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Harwood Wealth (“HW”) has updated on recent acquisition activity: it has secured three targets from the pipeline, with £1.8m total consideration. We leave our forecasts unchanged. HW has developed through a careful mix of small and medium-sized acquisitions. There are further acquisition opportunities under consideration which can be funded from cashflow and balance sheet resources. Alongside embedded growth from acquisitions already made and being integrated, we believe this is not recognised in the current 12x Oct-19 PER, falling to 10x Oct-20, which is attractive.
Harwood Wealth Management
HW has reported in line interim results with 28% adj. EBITDA growth leaving our FY19e forecast well covered (48%). We make no changes to forecasts. 5 acquisitions have been completed year to date, with a further 10 at varying stages of progress. A £7m credit facility has been secured, which we think is an optimal route to fund further acquisitions. The shares trade at a discounted 13x PER falling to 10.5x, with potential earnings upside. We think a 160p/share intrinsic value is more appropriate (17x PER).
Harwood Wealth has posted in line final results. Adj. EBITDA is as expected: £6.1m vs N+1Se £6.0m. Earnings growth is strong, reflecting organic growth and annualising acquisitions. Nine bolt ons were completed in the year, a further one announced today, with 2 at signed heads and a further 6 in advanced stages. We do not change our earnings forecasts but take this opportunity to issue maiden FY21 estimates. Shares are trading at an attractive multiple (15x) below the sector before a consolidation premium. A 17x FY19e PER would imply a 160p/share intrinsic value.
Harwood Wealth (HW/ LN) Appointment of Gillian Davies as Interim CFO | Lookers (LOOK LN) Resilient H1 PBT given comp, on track to revert to PBT growth in H2
Harwood Wealth Management Lookers plc
Harwood Wealth (“HW”) has reported in line interim results. AuI/M has grown as a product of an organic and acquisitive strategy, which has driven revenue (+44%) and earnings (adj. EBITDA +50%). H1 adj. EBITDA totals 50% of N+1Se FY18e. We leave our forecasts unchanged, but tweak the dividend down by 4-11%. HW has completed 69 acquisitions to date (9 H1’18) and has 18 at non-binding heads of terms. We believe the current 18.5x FY19e PER rating is attractive as the strategy continues to deliver.
Harwood Wealth (“HW”) has provided an update summarising all acquisitions in H1. Nine acquisitions have been completed with £310m additional AuI. Consideration payable totals £10.9m, but part of this will be paid in coming years and is contingent on performance. We do not change our forecasts at this stage with these acquisitions providing only a partial contribution in FY18e. We note an attractive 16x PER (ex-free cash available to make acquisitions). HW will announce interims on 3rd July 2018.
Consumer Sector Key takeaways from the Consumer reporting season | Harwood Wealth (HW LN) Acquisition of Berkshire-based IFA with £34m AuI | Porta Communications (PTCM LN) Results show progress from reorganisation | Sanderson Group (SND LN) H1 slightly ahead, no change to full year expectations | Sinclair Pharma (SPH LN) FY’17 results in line, US sales team established for Silhouette rollout
HW/ PTCM SPH SND
Harwood Wealth (“HW”) has been appointed portfolio research partner by Frenkel Topping on a £250m mandate. Wellian, HW’s discretionary portfolio management team, will construct appropriate portfolios on behalf of Frenkel Topping’s client base. Whilst an encouraging development, the mandate win does not prompt a change to our forecasts. We continue to see material value creation in HW through the use of existing balance sheet capacity to make accretive consolidating acquisitions in the wealth advisory space.
Harwood Wealth has issued FY17 final results showing an 8% beat vs our adj. EBITDA forecast. Growth has been impressive once again with organic and acquisitive activity driving +59% growth in adj. EBITDA. AuI grew by 81% to £3.8bn incl. £1bn from NDL. 7 acquisitions were made during FY17 and a further 3 post-period end. We push through the £0.3m beat prompting a 4-6% upgrade to FY18e and FY19e. We see value creation from continued strategic execution and would highlight a 21x ex-cash PER.
Harwood Wealth has issued a strong full year trading statement. Revenue and adjusted EBITDA for the full year are now expected to be ahead of market expectations. Performance has been positive during H2 with the combination of organic and acquisitive growth continuing. We upgrade our FY17e EBITDA forecast by 11% to £4.0m. With a pipeline of acquisitions, organic growth potential and a well capitalised balance sheet, we see intrinsic value at >230p in time.
Harwood Wealth (“HW”) has continued to execute on the consolidation strategy which has yielded strong returns to date with in line H1’17 results. H1 EBITDA equates to 50% of FY17e EBITDA. AuI/M has grown strongly to £3.3bn on acquisitions (especially NDL, +£1.0bn) and organic growth. Revenues and earnings continue to grow strongly as a result. Momentum and outlook for H2 is positive. We make no changes to our earnings forecasts but continue to see potential for accretive consolidation using the proceeds of the recent equity raise (£10m in March).
Harwood Wealth Group (“HW”) has reported interims – maiden results as a PLC – which are in line with our expectations. Revenues have continued to grow fuelled by underlying organic growth and the impact of a number of successful acquisitions. The acquisition pipeline is healthy with 7 prospects at non-binding heads of terms and having completed 13 YTD. We leave our forecasts unchanged at this point in time. We note £12.1m net cash post-IPO to be deployed on earnings enhancing acquisitions.
Harwood Wealth is a vertically integrated wealth management business with c.£1.25bn AuI/M. The business has a proven track record of selecting, completing and integrating acquisitions, with 48 completed to date. With 11 acquisitions made in FY16e to date, FY17e provides a more accurate representation of the current run rate performance. As our forecasts only capture organic growth, we see upside from the deployment of £10m new equity raised on IPO (at 81p) vs the current share price. The acquisition strategy will deliver earnings accretion creating shareholder value. The board will look to pay a dividend following FY16 final results (N+1Se 2.1p).
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