Daily Grime: BEG: SUS

Jeremy Grime | Dec 10, 2019 11:43

Chart

In case we are all a little weary of politics this chart gave me some hope. People are buying equities again

News

Morgan Stanley (NYSE:MS) to cut 1,500 jobs (confirmation we are in December)
MJ Hudson to IPO on election day
Litigation Capital Management Ltd (LON:LITL) hosts Capital Markets Day and confirms in advanced discussion to manage a USD 150m fund. With the markets risk averse nature there are good returns to be had from companies evolving from investors to fund managers. Other candidates include First Property, Mercia Asset Management and Arrow Global.
Orchard Funding Group PLC (LON:ORCH) Chairman to step down. Mark Sismey-Durrant to become Chairman who is an ex director of Heritable Bank and ex CEO of Hampshire Bank while the new NED Steven Hicks is Chair of the Risk Committee at State Bank of India (UK). Steps towards a banking license. Historic PE 10X, Yield 4%.
Begbies Traynor (LON:BEG) – H1 Results

Share Price 88p

Mkt Cap £112m

Conflict Disclosure: No Holding

Update H1 revenue up 20.7% to £33.8m and PBT up 33% to £4m. EPS up 24% to 2.6p (adjusted). Interim dividend up 13% at 0.9p. Organic revenue growth is disclosed as 10%. Net debt reduced over the period from £6m to £2.3m helped by the £7.8m placing in July. Outlook is confident “at least” in line with expectations.
Estimates 3 businesses were acquired towards the end of H1 which make £5.9m revenue and £1.8m PBT annualised. If we take the H1 revenue and add the acquisitions we get a full year revenue number of £70.5m which compares to consensus revenue of £69m. Undemanding.
Valuation PER 15.2X and yield of 3.2%. Adjusted ROE for the current year is c 11%.

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Conclusion The shares have been strong performers rising from 60p since July. But the company has an acquisition strategy that is investing earnings (and more) at accretive returns. This could continue for a while helped by the insolvency market. Further to go.
S & U (LON:SUS) – Trading Update

Share Price 2100p

Mkt Cap £254m

Conflict Disclosure: No Holding

Update Against a motor loans market that increased 2% Advantage’s new loans are up 11% with receivables growing 3.2% since July to £280m. Year on year receivables are up 5%. Net receivables in the property bridging loans are £28m against £18m a year ago in a slow market. Headroom is £132m. The outlook statement reminds us that S&U is more stable than politics.
Estimates Trading is in line which is PBT of £36.3m for the year to July 2020, EPS of 245p and a 123p dividend.
Valuation PER 8.6X Yield 5.9%. ROE is 17% and the shares trade at 1.5X book value.
Conclusion The shares are good value and the lending has proved to be cautious. Once there is some clarity on the economy the shares could rally. Electric vehicles is perhaps not a threat but driverless vehicles could be when it eventually happens. Looks tempting on a 12 month view.

Written By: Jeremy Grime

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