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In a positive 10-month update Belvoir has detailed trading is ahead of its pre-COVID expectations. Gross profit is up +10% in the Property division and +11% in Financial Services. Overheads are now significantly below the original budget and management has decided to reimburse staff for salary sacrifices earlier in the year and repay the Government in full for COVID furlough monies and grants. Taking all this into account, we have upgraded our FY 2020E EPS by +4%. A further catch-up dividend of 1.3p will be paid alongside the final 2020 dividend and we forecast net debt of £4.5m at December 2020. The resilience of Belvoir’s franchise model has been proved and, in our view, highlights the long-term growth potential when markets return to more normal conditions.
Companies: Belvoir Group PLC
Today's trading update demonstrates Equals producing robust FY20E revenues, as it rebounds steadily from a COVID-19 affected Q2/20. Material progress has been made on rightsizing costs, the benefits of which should be felt in FY21E. While our newly reissued forecasts expect a weaker profit delivery in H2/20E, we expect strong YoY EBITDA growth thereafter, as the group returns to double-digit revenue growth with a rationalised cost base and geared profit growth. Should these forecasts be met, we expect the current c2x EV/Sales multiple to move back towards Jan 20's pre-covid 4x multiple, hence we move back to “Buy”.
Companies: Equals Group Plc
H1 has seen a clearer outlook for portfolio valuations which has allowed Mercia to recoup some of the reduction at the Finals. Cash earnings are better than expected as costs have remained lower for longer. A well-funded portfolio and £25m cash has prompted declaration of a maiden 0.1p interim dividend – a strong signal of confidence. Lower costs and increased asset values have prompted 30-45% upgrades to adj. EBITDA across the horizon. The shares are trading at a 32% discount to NAV, of which 17% is cash. This disregards all value for the asset management platform. A 10x EBITDA multiple ascribed to 3rd party asset management earnings plus NAV points to a c.40p/share intrinsic value, before further value creation.
Companies: Mercia Asset Management PLC
Today's news & views, plus announcements from AZN, LLOY, WEIR, TATE, GFTU, INCE, DELT, SOLG, HYVE
Companies: LLOY SOLG INCE
Litigation Capital Management (LCM) is an alternative asset manager specialising in disputes financing, with its main operations in Australia and the UK. The company provides funding for litigation in exchange for a share of any settlement and has built a strong track record of supporting winning c
Companies: Litigation Capital Management Ltd
Record has set itself the goal of generating greater growth and H121 showed some encouraging steps in this direction. The substantial new dynamic hedging mandate in the period was traditional business for the group, but there was also news of a new currency impact fund, which provides diversification, higher fee margins and the potential for significant development. The implementation of new IT systems is underway, and measures to develop and retain staff have been taken.
Companies: Record plc
Marlowe has released a robust set of interim results, with Adj EBITDA up c16% YoY to £11.5m (c250bp margin expansion to 14.8%). FY21E has been a significant year for Marlowe, including completion of two transformational acquisitions, along with multiple bolt-ons. Run-rate revenues now exceed £225m, and underlying organic growth remains on track. We update our forecasts to reflect recent bolt-ons (FY22E Adj EPS up 1% to 29.2p), and reaffirm our Buy rating.
Companies: Marlowe Plc
Today's news & views, plus announcements from LLOY, POG, FRAS, PETS, SPR, WHI, FKE, RLE
Companies: Lloyds Banking Group plc (LLOY:LON)Real Estate Investors plc (RLE:LON)
Mercia has demonstrated real progress on its three-year strategic plan to achieve operating profitability, expand AUM to £1bn and ‘evergreen’ the balance sheet by end FY22. AUM have increased to £872m, with third-party, fee-earning FUM of £722m. The group delivered an operating profit of £8.0m (H120: £2.1m), an adjusted operating profit (ex-realisations, fair value gains, etc) of £1.1m (H120: £0.6m loss) and H121 EPS of 1.87p (H120: 0.69p). Revenues are sustainable, with 87% recurring, allowing Mercia to initiate a progressive dividend policy, with a maiden interim dividend of 0.1p per share. Despite progress, Mercia’s shares continue to trade at a material 20% discount to NAV (0.80x), before considering the incremental value of the third-party funds business (we estimate at 3% of FUM, or 4.9p).
Henderson Far East Income (HFEL) has experienced a tough period of capital performance as market participants have focused ever more on growth and momentum rather than cash flows and dividends. However, in a year where the majority of investment trusts have needed to dip into reserves to avoid cutting their dividends, HFEL stands out in that it not only delivered year-on-year dividend growth of 2.7% for FY20, it fully funded its dividend from portfolio income and even made a small contribution to reserves to help underpin future dividend growth. Managers Mike Kerley and Sat Duhra remain convinced that market focus will return to value and yield factors, as seen in the quantitative easing era of 2011–13, given the ‘even lower for even longer’ interest rate outlook.
Companies: Henderson Far East Income
In this note, we examine three aspects of OCI’s NAV: firstly, why investors can have confidence that it is conservatively calculated, evidenced by i) realisations above carry cost, ii) no incentive to inflate valuations, and iii) a tech-enabled business mix; second, NAV has been robust through COVID-19, a feature we expect to continue, driven by digitally delivering companies, largely defensive sectors and OCI’s large cash balances; third, upside from incorporating the market’s “vaccine” recovery in OCI’s NAV is compounded by underlying structural growth and a unique sourcing model in attractive markets. The 29% discount to NAV is an additional attraction.
Companies: Oakley Capital Investments
Resilience throughout the COVID pandemic has driven positive portfolio gains and further capital investment. The 119p/share NAV does not come as a surprise given the £27.5m equity raise at 120p was only completed a month ago, and will be deployed to target a deep £120m pipeline – now underway. Trading momentum has been sustained in Augmentum's (“AUGM”) portfolio companies which are high growth, disruptive and innovative. There is (much) more value to play for as this continues. For public markets investors, this is a diversified and professionally managed route to access attractive VC assets with structural growth. Should this value be forthcoming, the current premium is only the tip of the iceberg.
Companies: Augmentum Fintech
President Trump likes to project himself as a highly successful businessman, but surprisingly little is known about his true financial position. Various articles, including a 2016 in-depth analysis by The Wall Street Journal, have speculated about his income and asset base. All sorts of claims and counter-claims have been made about his wealth – by Trump himself, pitching his fortune at some $9bn, and by journalist Timothy O'Brien, suggesting that it is as “low” as $150m-$250m. It is doubtful whether we shall ever know the truth, but we can use Trump’s UK corporate filings to gain an insight into his businesses in Scotland.
Companies: AVO ARBB ARIX CLIG DNL FLTA ICGT PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
Today's news & views, plus announcements from Capita, JD Wetherspoon, HarbourVest Global Private Equity, Walker Crips Group, Randall & Quilter*, Michelmersh Brick, LoopUp, Schroders British Opportunities Trust and Baillie Gifford UK Growth Trust.
Companies: Randall & Quilter Investment Holdings Ltd.
An in-line trading update for the year to 31 December 2020 states EBITDA will be at least £3.6m and £2.0 at the PBT level. However, conservative budgeting affects 2021E and 2022E with the company rebasing expectations following year-end re-forecasting exercise, taking into account the prolonged challenging macroeconomic environment. The acquisitive opportunity remains in place.
Companies: STM Group PLC