Lighthouse Group – Pre Close Trading Update
Share Price 38p
Mkt Cap £48m
- Positive trading update for six months to 30 June 2018 Lighthouse’s model of organic revenue growth by providing financial advice to members of 21 affinity partners continues to trade positively in the first half of 2018, in line with management’s expectations and ahead of the 8% revenue growth achieved in H1 2017. The company continues to be debt-free with a net cash balance of £9.6m. The outlook is positive with the board confident of further growth in H2.
- Estimates remain unchanged at this stage but we note that our full year revenue forecast looks for 5% revenue growth to December 2018 compared to 8% in H1 2017. We also note the possibility that Luceo Asset Management could begin to materially add to revenue forecasts. AUM stood at £37m at December 2017 after a standing start of £4m earlier that year
- Valuation Lighthouse currently trades at a PER of 23.6x. This falls to 20.9x for 2019E and 17.9x for 2020E while the dividend yield increases. We believe Lighthouse deserve a higher rating relative to peers given the contracted relationship with 6 million individuals under the affinity model. We increase our price target to 40p, recognising the value of Lighthouse’s unique distribution relationship
- Conclusion Yesterday Moola was acquired by JLT, evidencing that robo advisers require distribution in order to grow. The value of Lighthouse’s distribution ability will become more apparent to the market over the year. The advice relationship with affinity partner members is now supplemented by the sponsored investment solutions offered by Luceo, providing potential for upgrades as well as rerating. Having invested in the platform over recent years, the company is now set to reap the benefits
Record Plc - Trading Update
Share Price 42p
Mkt Cap £83m
- Update AUM are down 0.5% over the quarter to June to £61.9bn. This is made up of 1% net inflows offset by the passive hedging process hedging itself downwards through exchange rate movement. The number of clients is up from 60 to 64 and the fee rates were largely unchanged over the period.
- Estimates Revenues are expected to remain broadly flat in the year to Mar 19 and to March 20. PBT is expected to be £6.3m followed by £6.5m. EPS 2.55p and 2.63p with a 93% payout ratio providing a dividend of 2.38p.
- Valuation EV/AUM is c 1%. PER 16 and yield 5.7%.
- Conclusion The shares are unchanged in the last 12 months. With little sign of growth save the 4 new clients its hard to justify a PER of 16X.
Personal Group – Trading Update
Share Price 466p
Mkt Cap £144m
- Update All areas of the business are performing well which is reported to be in line with management expectations. Salary sacrifice has benefitted from Royal Mail running its offer continuously from March and has been appointed to the Crown Commercial Services framework. The Saas business won two significant clients with combined employees of 10,300. Sage is gearing up for distribution to the wider client base. And the Hapi app next generation has been launched. Which is nice to hear on a Friday.
- Estimates Forecast assume 31% revenue growth and 6% PBT growth for the year to December 18. A payout ratio of 83% gives a dividend of 23p from EPS of 27.5p
- Valuation This business provides a 23% ROCE. The PER is 17 supported by a yield of 4.9%.
- Conclusion The value of this business is in its unique distribution into blue collar employees. This intellectual property enables the high ROCE. The company has invested significantly in new partnerships and products. This is an opportunistic time to be owning this company.