Last close As at 05/08/2026
GBP2.28
— 0.00 (0.00%)
Market capitalisation
GBP76m
Research: Industrials
Braemar’s FY24 results were in line with expectations with revenues flat, but operating profits down, having been hit by one-off costs and strong comparatives. The underlying operations continue to expand and diversify, which drove an 8% increase in FY24 fixtures, and the company remains well-positioned to drive its future growth strategy. The trading outlook for FY25 is promising and Braemar should be able to leverage its strong balance sheet in pursuit of strategic growth. We have maintained our underlying revenue and operating profit estimates for FY25 and FY26, but rolled over the base year for the valuation, which results in a modest increase in the valuation from 500p to 535p per share, offering c 70% upside.
Braemar |
Diversification underpins resilience |
FY24 results |
General industrials |
31 May 2024 |
Share price performance
Business description
Next events
Analyst
Braemar is a research client of Edison Investment Research Limited |
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Braemar’s FY24 results were in line with expectations with revenues flat, but operating profits down, having been hit by one-off costs and strong comparatives. The underlying operations continue to expand and diversify, which drove an 8% increase in FY24 fixtures, and the company remains well-positioned to drive its future growth strategy. The trading outlook for FY25 is promising and Braemar should be able to leverage its strong balance sheet in pursuit of strategic growth. We have maintained our underlying revenue and operating profit estimates for FY25 and FY26, but rolled over the base year for the valuation, which results in a modest increase in the valuation from 500p to 535p per share, offering c 70% upside.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
02/23 |
152.9 |
18.0 |
45.5 |
12.0 |
6.8 |
3.9 |
02/24 |
152.8 |
14.6 |
39.6 |
13.0 |
7.8 |
4.2 |
02/25e |
152.5 |
15.3 |
42.8 |
14.0 |
7.2 |
4.5 |
02/26e |
152.5 |
16.0 |
46.9 |
16.0 |
6.6 |
5.2 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
FY24 results better than the headline figures
Braemar’s FY24 results were in line with market expectations, with revenue flat at £152.8m and reported underlying operating profit of £16.5m, down from £20.1m in FY23. Excluding £1.5m of acquisition-related expenditure, underlying operating profit would have been £18.1m, down £2.0m. However, excluding a £2.6m swing in FX, underlying operating profit was up modestly year-on-year. Continuing, diluted EPS was down 14.6% at 32.4p, from which Braemar anticipates paying a total dividend of 13p, up 8.3% on last year. Year-end net cash fell from £6.9m to £1.0m, largely due to one-offs.
FY25 target achieved for second year in a row
Braemar has again, or for the second year in a row, achieved its medium-term target of achieving a sustainable doubling of the FY21 underlying operating profit of £8.9m by FY25, thus highlighting the robustness of earnings. We remain confident that the company can grow further from here, given the growth strategy, ungeared balance sheet and fragmented markets. The acquisitions of Southport Maritime and the Madrid tanker desk are good examples of expansion as well as the new desks opened in South Korea and Singapore, with others set to follow.
Valuation: Lifted from 500p/share to 535p
Braemar enters FY25 with an orderbook that is up 47% y-o-y to $82.6m and strong fundamentals, with tanker rates remaining robust and depressed dry cargo rates set to recover. Furthermore, the global fleet continues to grow, while at the same time the existing fleet continues to age, implying pent up renewal demand that will need to be addressed within the foreseeable future. Our forecasts are largely unchanged but we have rolled over the base year for our dividend discount model (DDM) valuation, which leads to an increase from 500p to 535p/share.
FY24 results underpin long-term growth
Braemar’s FY24 results were in line with expectations, but down year-on-year due to the exceptional FX boost to the performance in FY23. Stripping away the noise, we believe these FY24 results were confirmation that Braemar’s growth strategy is working well and is likely to see continued investment in organic growth and new desks, potential M&A in a fragmented global market and higher dividend payouts for shareholders. Braemar trades on a P/E of just 7.2x to FY25e and yields 4.5% on a well-covered dividend. Furthermore, we have raised our DDM valuation from 500p to 535p/share.
Robust result against exceptional FY23 comparative
Braemar’s FY24 results were in line with market expectations, with revenue flat year-on-year at £152.8m and reported underlying operating profit of £16.5m, down from £20.1m in FY23. Excluding £1.5m of acquisition-related expenditure, underlying operating profit was £18.1m, down £2.0m. However, excluding a £2.6m swing in FX (FY23 included a £1.5m FX gain, FY24 included a £1.1m FY loss), underlying operating profit was up year-on-year. Continuing, diluted EPS was down 14.6% at 32.4p, from which Braemar anticipates paying a total dividend of 13p, up 8.3% on last year.
Year-end net cash fell from £6.9m to £1.0m, largely due to £1.0m of tax paid on account, the £2.6m cost of the internal independent investigation and a £2.0m cash bonus paid before year end. The currency headwind also reduced the value of cash by c £1.4m.
Exhibit 1: FY22 to FY24 results summary
£m |
FY22 |
FY23 |
% chg |
FY24 |
% chg |
Chartering |
63.0 |
99.2 |
57.3% |
103.9 |
4.8% |
Investment advisory |
26.3 |
36.8 |
39.8% |
25.7 |
-30.1% |
Risk advisory |
12.0 |
17.0 |
41.7% |
23.1 |
36.0% |
Revenue |
101.3 |
152.9 |
50.9% |
152.8 |
-0.1% |
Chartering |
6.2 |
15.6 |
149.4% |
13.6 |
-12.5% |
Investment advisory |
6.4 |
7.7 |
21.7% |
3.9 |
-50.0% |
Risk advisory |
1.6 |
3.0 |
84.0% |
4.1 |
37.5% |
Underlying operating profit ex-central costs |
14.2 |
26.3 |
84.9% |
21.6 |
-17.9% |
Central costs |
(4.2) |
(6.2) |
49.4% |
(5.0) |
-18.9% |
Reported underlying operating profit |
10.1 |
20.1 |
99.6% |
16.5 |
-17.6% |
Chartering |
9.9% |
15.7% |
- |
13.1% |
- |
Investment advisory |
24.2% |
21.1% |
- |
15.1% |
- |
Risk advisory |
13.5% |
17.5% |
- |
17.7% |
- |
Underlying operating margin |
9.9% |
13.1% |
- |
10.8% |
- |
PBT (reported) |
8.5 |
9.5 |
10.6% |
7.5 |
-20.4% |
EPS normalised, diluted (p) |
18.8 |
37.9 |
101.7% |
32.4 |
-14.6% |
DPS (p) |
9.0 |
12.0 |
33.3% |
13.0 |
8.3% |
Net (debt)/cash |
(9.3) |
6.9 |
-174.1% |
1.0 |
-85.8% |
Source: Braemar, Edison Investment Research
Chartering revenue increased 4.8% to £103.9m driven by the net effect of a much-improved contribution from Tankers (up £13.1m), reflecting the acquisitions, better results from Specialised Tankers (+£3.0m) and from Offshore (up £2.4m), offset by Dry Cargo, which reported revenue down £13.7m due to significantly lower charter rates (down 35% y-o-y). Tankers accounted for 36% (FY23: 27%) of group revenue, while Dry cargo accounted for 14% (FY23: 23%). Overall, charter fixture volumes increased 8% driven by the acquisitions in Tankers and growth in the offshore business.
Investment Advisory revenue declined c £11.0m to £25.7m, as Sale and Purchase (S&P) business contracted by £8.5m, and Corporate Finance revenue fell £2.5m. The remaining £23.1m of revenue was driven by the Risk Advisory business, which rose £6.1m y-o-y, benefiting from the inclusion of the new Natural Gas desk, demonstrating the benefit of Braemar’s diversified growth strategy.
The movement in underlying operating profit before central costs, down from £26.3m to £21.6m, largely reflects a reversal of an FX gain last year, of £1.5m, to an FX headwind of £1.1m this year, the inclusion of c £1.5m of acquisition costs relating to the Madrid office and an increased staff headcount and other operational costs.
Pre-tax profit and EPS were both down, reflecting the issues mentioned above, but the DPS was increased 8% to 13p reflecting the underlying strength of the business. It is also worth noting that the dividend is c 2.5x covered and that the company ended the year with net cash of £1.0m, despite the payment of £1.0m of tax on account, the costs associated with the internal independent investigation (£2.6m) and the payment of some bonuses totalling £2.0m before the year end.
Simplify, refocus, grow
In 2021, the current CEO, James Gundy, set about simplifying the business to focus on shipbroking and securities, and to dispose of unrelated operations that did not produce the required returns and were a drag on management capacity. Looking at Exhibit 2, it is clear to see why this was the case as the total business was shrinking, but the underlying broking and securities businesses, Exhibit 3, were in fact growing steadily and this growth was hidden from view.
|
Exhibit 2: Headline revenue (£m), FY13–24 |
Exhibit 3: Underlying revenue (£m), FY13–24 |
|
|
|
Source: Braemar, Edison Investment Research |
Source: Braemar, Edison Investment Research |
|
Exhibit 2: Headline revenue (£m), FY13–24 |
|
|
Source: Braemar, Edison Investment Research |
|
Exhibit 3: Underlying revenue (£m), FY13–24 |
|
|
Source: Braemar, Edison Investment Research |
Since that time, underlying revenue has nearly doubled as Braemar has invested in broking desks in geographies and lines where it was underrepresented, and made acquisitions. To this end, it acquired Southport Maritime in December 2022, which gave it access to the tanker market in the US, acquired a tanker desk in Madrid and hired a Natural Gas Securities team to address this rapidly growing market.
We are confident that Braemar will continue to seek to expand its offering in the future, growing organically and via acquisition. Furthermore, Braemar is not financially constrained. It ended the period with net cash of £1.0m. It has access to a £30m revolving credit facility and a further £10m via an accordion facility, giving it more than £40m of investment capacity, though at the year-end it had drawn £27.8m of the RCF.
Exhibit 4 below offers an indication of the potential opportunity. Shipbroking is a fragmented market populated by numerous, often ‘boutique’, operators. Furthermore, the market is slowly becoming increasingly regulated, implying increasing costs of compliance, something that we believe Braemar can navigate. The chart also highlights two new offices, in Singapore and Korea, that should help fill ‘holes’ in several broking activities and in securities. The chart also highlights two new Organised Trading Facility (OTF) desks that are planned to be established in the UK and Europe. We believe these are modest examples of management action to organically grow the overall business.
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Exhibit 4: Braemar growth opportunities |
|
|
Source: Braemar. Note: 1 Organised Trading Facility. |
From a shareholder’s point of view, the benefits are clear. The strategy to grow is producing improving earnings as demonstrated in the chart below. This in turn is being reflected in the increasing dividend payments, which were flat at 5p/share between FY19 and FY21. However, the dividend had more than doubled by FY23 and grew further in FY24. Given the growth strategy, the unencumbered balance sheet and the strong dividend cover, we believe that the dividend is likely to grow further in the future, hence we value the company on a DDM basis.
|
Exhibit 5: EPS and DPS, FY19 to FY25e |
|
|
Source: Braemar, Edison Investment Research |
Valuation pushed up to 535p, from 500p
Shipbroking can be a volatile market, as evidenced by fluctuations in tanker charter rates, for example, over the last four years. However, Braemar is a diversified broker covering numerous markets and therefore, although individual income streams can fluctuate, the collective income stream is generally more robust. We value Braemar on a DDM basis.
Rolling over our base year dividend to the FY25 estimate of 14p/share and applying our estimate of the cost of capital and dividend growth rates of 7.6% (up from 7.4%) and 5.0% (unchanged), respectively, we arrive at a valuation of 535p/share, materially above the current share price of around 300p, and up from our previous valuation of 500p/share. With many market participants expecting interest rates to fall in future months, a lower cost of capital and/or a higher dividend growth rate assumption could be possible, lifting the potential valuation.
Exhibit 6: Implied valuations (p/share) from a range of inputs
Dividend growth rate (%) |
||||||
3.0% |
4.0% |
5.0% |
6.0% |
7.0% |
||
Cost of capital |
8.5% |
254.5 |
311.1 |
400.0 |
560.0 |
933.3 |
7.8% |
294.7 |
373.3 |
509.1 |
800.0 |
1,866.7 |
|
7.6% |
303.5 |
387.5 |
535.0 |
867.9 |
2,283.8 |
|
7.3% |
329.4 |
430.8 |
622.2 |
1,120.0 |
5,600.0 |
|
7.0% |
350.0 |
466.7 |
700.0 |
1,400.0 |
N/A |
|
Source: Edison Investment Research
Exhibit 7: Financial summary
£'m |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025e |
2026e |
2027e |
||
28-February |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||||||
Revenue |
|
|
117.9 |
117.7 |
83.7 |
101.3 |
152.9 |
152.8 |
152.5 |
152.5 |
152.5 |
EBITDA |
|
|
10.4 |
14.4 |
11.4 |
13.5 |
23.4 |
20.4 |
20.8 |
21.2 |
21.0 |
Normalised operating profit |
|
|
9.1 |
11.0 |
7.7 |
10.1 |
20.1 |
16.5 |
17.0 |
17.4 |
17.2 |
Amortisation of acquired intangibles |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
(12.5) |
(3.8) |
(1.5) |
(0.3) |
(2.5) |
(7.2) |
(1.3) |
0.0 |
0.0 |
||
Impairment |
0.0 |
0.0 |
0.0 |
0.0 |
(9.1) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
0.5 |
0.7 |
0.0 |
0.0 |
3.0 |
0.1 |
0.0 |
0.0 |
0.0 |
||
Reported operating profit |
(2.9) |
7.9 |
6.2 |
9.7 |
11.5 |
9.4 |
15.7 |
17.4 |
17.2 |
||
Net Interest |
(0.2) |
(1.4) |
(1.1) |
(1.2) |
(2.0) |
(2.0) |
(1.7) |
(1.4) |
(0.9) |
||
Joint ventures & associates (post tax) |
0.0 |
(0.3) |
0.0 |
(0.0) |
(0.0) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
8.9 |
9.4 |
6.7 |
8.9 |
18.0 |
14.6 |
15.3 |
16.0 |
16.2 |
Profit Before Tax (reported) |
|
|
(3.1) |
6.3 |
5.1 |
8.5 |
9.5 |
7.5 |
14.0 |
16.0 |
16.2 |
Reported tax |
(1.5) |
0.0 |
(1.6) |
(1.8) |
(4.9) |
(2.9) |
(3.5) |
(4.0) |
(4.1) |
||
Profit After Tax (norm) |
7.3 |
9.4 |
5.1 |
7.0 |
13.2 |
11.7 |
11.8 |
12.0 |
12.2 |
||
Profit After Tax (reported) |
(4.7) |
6.3 |
3.6 |
6.7 |
4.6 |
4.6 |
10.5 |
12.0 |
12.2 |
||
Discontinued operations |
(22.7) |
(2.3) |
1.0 |
7.2 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
7.3 |
9.4 |
5.1 |
7.0 |
13.2 |
11.7 |
11.8 |
12.0 |
12.2 |
||
Net income (reported) |
(27.4) |
4.0 |
4.5 |
13.9 |
4.6 |
4.6 |
10.5 |
12.0 |
12.2 |
||
Basic average number of shares outstanding (m) |
31 |
31 |
31 |
31 |
29 |
30 |
28 |
26 |
24 |
||
EPS - basic normalised (p) |
|
|
23.78 |
30.19 |
16.23 |
23.06 |
45.48 |
39.63 |
42.78 |
46.90 |
51.50 |
EPS - diluted normalised (p) |
|
|
21.79 |
27.28 |
13.43 |
18.79 |
37.85 |
32.42 |
34.31 |
37.06 |
39.98 |
EPS - basic reported (p) |
|
|
(88.63) |
12.88 |
14.45 |
45.56 |
15.85 |
15.65 |
37.97 |
46.90 |
51.50 |
Dividend (p) |
5.00 |
5.00 |
5.00 |
9.00 |
12.00 |
13.00 |
14.00 |
16.00 |
18.00 |
||
Revenue growth (%) |
14.4 |
(-0.2) |
(-28.9) |
21.0 |
50.9 |
(-0.1) |
0.0 |
0.0 |
0.0 |
||
EBITDA Margin (%) |
8.8 |
12.3 |
13.6 |
13.4 |
15.3 |
13.3 |
13.7 |
13.9 |
13.7 |
||
Normalised Operating Margin |
7.7 |
9.4 |
9.2 |
9.9 |
13.1 |
10.8 |
11.2 |
11.4 |
11.3 |
||
BALANCE SHEET |
|||||||||||
Fixed Assets |
|
|
91.7 |
114.7 |
106.6 |
99.8 |
97.7 |
91.7 |
88.9 |
86.1 |
83.3 |
Intangible Assets |
86.0 |
86.2 |
86.1 |
80.9 |
75.4 |
74.5 |
74.5 |
74.5 |
74.5 |
||
Tangible Assets |
2.0 |
11.9 |
9.8 |
7.1 |
5.3 |
5.6 |
2.8 |
(0.0) |
(2.8) |
||
Investments & other |
3.7 |
16.5 |
10.7 |
11.9 |
17.0 |
11.6 |
11.6 |
11.6 |
11.6 |
||
Current Assets |
|
|
71.9 |
68.3 |
50.3 |
49.8 |
80.3 |
69.9 |
72.2 |
77.6 |
80.9 |
Debtors |
37.1 |
39.5 |
33.4 |
35.8 |
43.3 |
37.7 |
38.1 |
38.1 |
38.1 |
||
Cash & cash equivalents |
24.1 |
28.7 |
16.4 |
14.0 |
36.0 |
29.2 |
31.1 |
36.6 |
39.8 |
||
Other |
10.6 |
0.0 |
0.4 |
0.0 |
1.0 |
2.9 |
2.9 |
2.9 |
2.9 |
||
Current Liabilities |
|
|
92.0 |
78.9 |
54.0 |
43.4 |
65.8 |
49.1 |
48.7 |
49.1 |
49.0 |
Creditors |
44.9 |
47.6 |
47.8 |
39.9 |
58.4 |
43.8 |
44.4 |
44.4 |
44.4 |
||
Tax and social security |
1.4 |
1.3 |
1.3 |
1.6 |
4.1 |
1.6 |
0.7 |
1.2 |
1.3 |
||
Short term borrowings |
35.8 |
25.1 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
9.8 |
4.8 |
4.9 |
1.9 |
3.3 |
3.7 |
3.6 |
3.4 |
3.3 |
||
Long Term Liabilities |
|
|
13.2 |
44.9 |
39.9 |
34.8 |
35.4 |
32.8 |
32.8 |
32.8 |
32.8 |
Long term borrowings |
4.6 |
2.6 |
2.7 |
2.8 |
2.9 |
2.3 |
2.3 |
2.3 |
2.3 |
||
Other long term liabilities |
8.6 |
42.2 |
37.3 |
32.0 |
32.6 |
30.5 |
30.5 |
30.5 |
30.5 |
||
Shareholders' equity |
|
|
58.4 |
59.2 |
62.9 |
71.5 |
76.7 |
79.6 |
79.5 |
81.8 |
82.4 |
CASH FLOW |
|||||||||||
Op Cash Flow before WC and tax |
(1.8) |
9.7 |
8.8 |
12.0 |
12.8 |
11.3 |
17.8 |
19.8 |
20.0 |
||
Working capital |
4.6 |
(0.4) |
4.1 |
5.2 |
4.1 |
(6.0) |
0.1 |
(0.1) |
(0.1) |
||
Exceptional & other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Tax |
(1.1) |
1.2 |
(0.8) |
(2.2) |
(4.4) |
(6.5) |
(4.4) |
(3.5) |
(4.0) |
||
Other |
6.1 |
1.4 |
1.8 |
6.2 |
11.4 |
8.5 |
5.3 |
4.9 |
4.4 |
||
Net operating cash flow |
|
|
7.8 |
11.8 |
13.9 |
21.3 |
23.9 |
7.4 |
18.7 |
21.1 |
20.3 |
Capex |
(2.4) |
(1.7) |
(1.1) |
(1.2) |
(0.8) |
(0.5) |
(1.6) |
(1.6) |
(1.6) |
||
Acquisitions/disposals |
(1.7) |
(6.3) |
3.7 |
(8.1) |
5.4 |
0.8 |
1.3 |
1.3 |
0.0 |
||
Net interest |
(0.9) |
(1.5) |
(1.2) |
(0.8) |
(1.8) |
(2.2) |
(1.7) |
(1.4) |
(0.9) |
||
Equity financing |
23.0 |
3.9 |
(28.9) |
(2.5) |
1.4 |
(3.1) |
(3.1) |
(3.1) |
(3.1) |
||
Dividends |
(4.6) |
(4.6) |
0.6 |
(2.1) |
(3.2) |
(2.4) |
(5.5) |
(4.6) |
(5.3) |
||
Other |
(2.4) |
0.0 |
(0.9) |
(7.0) |
(6.8) |
(5.3) |
(6.1) |
(6.1) |
(6.1) |
||
Net Cash Flow |
18.7 |
1.6 |
(13.9) |
(0.5) |
18.1 |
(5.4) |
1.9 |
5.5 |
3.3 |
||
Opening net debt/(cash) |
|
|
2.4 |
11.7 |
20.0 |
8.8 |
9.3 |
(6.9) |
(1.0) |
(2.9) |
(8.3) |
FX |
(1.1) |
(0.8) |
(0.7) |
0.3 |
2.6 |
(1.4) |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
(26.9) |
(9.0) |
25.8 |
(0.3) |
(4.5) |
0.8 |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
11.7 |
20.0 |
8.8 |
9.3 |
(6.9) |
(1.0) |
(2.9) |
(8.3) |
(11.6) |
Source: Braemar accounts, Edison Investment Research
|
|
Research: Financials
Helios Underwriting (Helios) delivered a strong EPS recovery in FY23 from a loss of 3.1p in FY22 to a profit of 21.6p, 50% ahead of our forecast of 14.7p, driven by super syndicate underwriting profit of £31.6m versus £0.1m in FY22 and a combined ratio of 86%. Lloyd’s of London (Lloyd’s) capacity at year-end was accelerated to £507m relative to our expectation of £502m, with retained capacity of £392m also ahead. Net asset value (NAV) increased from 151p/share to 189p/share, slightly ahead of our forecast of 187p/share. The dividend doubled from 3p/share to 6p/share as expected. Our forecasts and valuation are under review.