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NAHL has a track record of being highly innovative around changes in regulation and we believe the changing personal injury landscape presents an opportunity to build market share. The recent strategy statement provides forecast benchmarks on which to base long-term investment decisions. The shares have more than halved from 2015 highs and valuations appear very modest in the context of the emerging investment case. Trading on a “trough” FY18 PE ratio of just 7.1x and a dividend yield of 9.6%, we believe the shares are meaningfully undervalued.
25 May 17
We remain confident that the outlook for UK consumer markets supports our top-line assumption of 3% growth in FY17 and Headlam is tracking in line with our earnings forecasts in the year to date. Returns should be supported by the price inflationary environment and a fresh look at efficiencies in the business providing the prospect of firming gross margins. The group is committed to a progressive dividend policy including potential special dividends and the shares are yielding around 5.6% our FY17 dividend forecast inclusive of a forecast further special being declared in respect of FY17. This is a momentum stock with superior yield.
25 May 17
Year end update
The FY17 end trading update highlights a strong top line performance in H217 and our expectation of 9% earnings growth is unchanged. Deal flow has clearly held up well into the postBrexit UK landscape with no sustained deferment of activity in core areas such as financial and property markets. Whilst the shares have been pushing new highs, we retain our positive stance given growth prospects in an opportunity-rich corporate landscape and the supportive 4% prospective yield.
25 May 17
Finals – Strong growth and a further upgrade
Finals reflect significant margin improvements within the Industrial division, the contribution from EuroMed, which was acquired in May 2016, and strong FX translation tailwinds due to weakness in sterling. Revenues increased 13.3% to £279.6m, (+1.7% constant FX) and with the trading margin improving from 8.6% to 10.4%, trading profits grew 37.1% to £29.2m (+18.2% constant FX). Adjusted PBT (excluding pension costs and exceptionals) was up 35.9% to £28.0m and, with a lower tax rate due to profits mix, adjusted EPS grew 39.6% to 14.8p. The dividend has been increased by 14.3% to 2.0p.
23 May 17
AGM trading update – forecasts unchanged
The AGM update highlights Advantage Finance performing well and the Group tracking in line with our forecast 18% earnings growth for FY18. The meaningful uplift in new loan transactions in the year to date will support the inherent “momentum in the system” from loan activity in recent years which will drive growth in FY18 & FY19. Whilst the shares have been impacted by negative sentiment on the car financing market, we are confident the group can fine tune its product into changing market dynamics to maintain bottom line leverage. We believe the scale of market opportunity and visibility over future earnings growth rates should attract a premium. Double digit earnings growth warrants a mid teens rating which would equate to a share price nearer 3000p on a one year view. As such, the underperformance of the shares creates a strong buying opportunity.
18 May 17
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