IG Group – FY Results to May
Share Price 865p
Mkt Cap £3.2bn
- Results Revenue up 16% to £569m. Margin up 5% to 49.4% produces operating profit up 32% to £281m. EPS up 34% to 61.7p and dividend increases 34% to 33.5p. With the regulatory changes coming in from 1 August the company expects a reduction in revenue guiding as previously to 10% from professional clients while operating costs will increase due to investment although bonuses will take a hit to mitigate the profit impact. The board expects to maintain the 43.2p dividend in the current year.
- Estimates These strong results are in line with forecasts. Going forward estimates look for a 7% reduction in revenue prior to resuming growth and a 13% PBT decline prior to growth resuming. Current year PBT is expected to be £234m and EPS 51.3p
- Valuation The current year PER is 16.9X and yield 4.5%. CMC is on a PER of 15X and yields 4.3% while Plus is on 9X and yields 6.8%
- Conclusion Better profit growth is forecasts for CMC due to the Australian white labelling and Plus is cheaper. Notwithstanding that all 3 in this sector look to have a lot of uncertainty around forecasts which is why the valuations are attractive. It may be time to take some risk for investors.
Just Group – Pre close update to June
Share Price 124p
Mkt Cap £1.2bn
- Update New business sales were up 56% in H1 overall with DB derisking increasing 143%, Gifl at9%, care plans at 2%. Lifetime mortgage advances were up 36%. The company says it remains comfortable with full year expectations. The statement also comments on the recent CP13/18 issued by the PRA which if implemnented in line with the proposals would result in a reduction in the regulatory capital surplus. CP 13/18 is due to be implemented by December.
- Valuation The tangible book val;ue is in the region of 180p per share and the shares have recently been weak following the issue of CP 13/18.
- Conclusion The shares are likely to remain weak with an implied equity issuance overhang until it becomes clear whether another equity issue will be needed to respond to the PRA new consultation paper.
Integrafin - - Q3 AUD update
Share Price 385p
Mkt Cap £1.3bn
- Update AUD increased 7.2% over the 3 months to June against the FTSE all share which increased 7.9%. Over 12 months the AUD are up 19.4%. Net inflows in the quarter were 3.2% and markets added 3.8%.
- Valuation PER is 35X and yield 1.6%. EV/AUd is 3.7%. While the AUD yield something in the region of 30 bps the operating margin is 48%.
- Conclusion The shares are up 96% since the company IPO’s in March and now trade at a valuation that can make investors reach for the defibrillter. I hear that Nucleus was heavily oversubscribed at a valuation that represents c 22X. This platform and IFA sector is where the growth is at and with the stickiness of AUM that can be hugely valuable. But really ….35X.
Charles Stanley –Q1 update
Share Price 365p
Mkt Cap £185m
- Update AUM were up 4.6% over the 3 months to June which compares to the WMA index increasing 4.6% over the period. Revenues in the company’s Q1 to June was £39.2m compared to £37.3m a year ago, an increase of 4%.
- Estimates Trading is in line with forecasts of 4% revenue growth over the year to March 19. No mention is made of the margin in the statement which is forecast to be 13% over the current year.
- Valuation EV/AUM is 0.5%. PER is 17X and yield 3%
- Conclusion The company has made significant progress in improving the margin although progress seems now to have slowed since the staff contracts have been renegotiated. I struggle to see strong returns from here,