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Last close As at 03/02/2023
GBP2.12
▲ 6.00 (2.92%)
Market capitalisation
GBP226m
Research: Financials
Numis has reported that its Q322 revenue was over £40m compared with the £37m run rate reported in H122. There was a strong improvement from Q222 with mergers and acquisitions (M&A) driving the performance of the investment banking activity. While conditions are less favourable for equity capital markets and equities, the group expects to meet market expectations for the full year and, allowing for a seasonally quiet summer period, our forecast is unchanged.
Numis Corporation |
Further evidence of diversification benefits |
Q322 trading update |
Financial services |
6 July 2022 |
Share price performance
Business description
Next events
Analysts
Numis Corporation is a research client of Edison Investment Research Limited |
Numis has reported that its Q322 revenue was over £40m compared with the £37m run rate reported in H122. There was a strong improvement from Q222 with mergers and acquisitions (M&A) driving the performance of the investment banking activity. While conditions are less favourable for equity capital markets and equities, the group expects to meet market expectations for the full year and, allowing for a seasonally quiet summer period, our forecast is unchanged.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
09/19 |
111.6 |
12.4 |
8.1 |
12.0 |
30.3 |
4.9 |
09/20 |
154.9 |
37.1 |
26.7 |
12.0 |
9.2 |
4.9 |
09/21 |
215.6 |
74.2 |
49.1 |
13.5 |
5.0 |
5.5 |
09/22e |
145.8 |
25.1 |
23.5 |
14.0 |
10.5 |
5.7 |
Note: *PBT and EPS are on a reported basis and EPS is fully diluted.
Positive M&A environment, subdued capital markets
Numis has invested in developing its M&A advisory, private markets (Growth Capital Solutions) and debt advisory capabilities and this has helped support investment banking revenue against a more difficult background for equity capital markets activities. M&A activity has been the main factor in this period and the group reports that the pipeline of announced and possible deals remains strong. For the future, the expected opening of a Dublin office in Q422 will facilitate providing services to non-UK issuers, European institutional investors and private companies seeking growth capital.
Equity revenue only slightly lower
On the equity side of the business, revenue was marginally below the run rate of the first half, reflecting more cautious investor sentiment and lower market and activity levels, particularly in UK small and mid-caps. However, trading performance improved, mitigating the impact of this weakness.
Valuation
Reflecting the more challenging equity capital market background, Numis shares are down c 27% year to date, which compares with -32% for UK peers and -26% for United States and European investment banks and advisory firms. The shares trade on a prospective P/E of under 11x and a price to book ratio of 1.4x compared with a 10-year average of 2.1x. A return on equity over cost of equity (ROE/COE) model suggests the current share price implies an ROE of 12.8% compared with the 18% 10-year average and our relatively muted current year estimate of 14%.
Selected transactions
Exhibit 1 shows selected transactions carried out by Numis since the beginning of the calendar year. It features examples of private market transactions, debt advisory mandates and a number of M&A transactions, particularly in Q322. Some of the transactions involved Numis corporate clients as M&A targets, but during the period examples of new corporate broking clients include Medica, Frasers, GB and Capita.
Exhibit 1: Numis – selected transactions since Q222 (January)
Company |
Date |
Role |
Transaction |
Money raised/ value (£m) |
Chrysalis Investments |
Jan-22 |
Joint bookrunner |
Fundraise |
60 |
TravelPerk |
Jan-22 |
Financial adviser |
Fundraise (private markets) |
84 |
Flipdish |
Jan-22 |
Financial adviser |
Fundraise (private markets) |
73 |
Georgia Capital |
Jan-22 |
Sponsor and financial adviser |
M&A |
131 |
Microfocus |
Jan-22 |
Debt and ratings adviser |
Term loan issuance & RCF |
1,365 |
Hilton Food |
Jan-22 |
Debt adviser |
Refinancing |
420 |
Diploma |
Feb-22 |
Debt adviser |
Refinancing |
422 |
Next15 |
Mar-22 |
Joint bookrunner, nomad and joint broker |
Placing |
50 |
Tyman |
Mar-22 |
Debt adviser |
Placing |
60 |
Clipper Logistics |
Mar-22 |
Sole financial adviser and corporate broker |
M&A |
c 1,000 |
VinaCapital |
Mar-22 |
Debt adviser |
Revolving credit facility |
32 |
UK Mortgages |
Apr-22 |
Sole financial adviser |
M&A |
710 |
Clinigen |
Apr-22 |
Financial adviser, corporate broker and nomad |
M&A |
1,300 |
International Public Partnerships |
Apr-22 |
Sole sponsor, broker and financial adviser |
Fundraise |
325 |
Accsys Technologies |
Apr-22 |
Joint bookrunner |
Placing |
17 |
Clipper Logistics |
May-22 |
Sole financial, Rule 3 adviser and corporate broker |
M&A |
c 1,000 |
Bluefield |
Jun-22 |
Sole sponsor, broker and financial adviser |
Fundraise |
150 |
Asset Co |
Jun-22 |
Sole financial adviser |
M&A |
289 |
Ocado |
Jun-22 |
Joint broker and bookrunner |
Placing |
578 |
CareTech |
Jun-22 |
Joint financial adviser and joint broker |
M&A |
c 870 |
Source: Numis, Edison Investment Research
London Stock Exchange issuance and trading volume
Exhibits 2 and 3 show the trend in new and further money raised on the Main Market and AIM. In the quarter to end-June there was a marked increase in Main Market issuance compared with the prior quarter, to end-March (+64%), although the level of issuance was down 52% compared with the prior year period. For AIM, total money raised was down 8% sequentially and 72% y-o-y.
Exhibit 2: LSE Main Market issuance (money raised) |
Exhibit 3: LSE AIM issuance (money raised) |
Source: London Stock Exchange (last data June) |
Source: London Stock Exchange (last data June) |
Exhibit 2: LSE Main Market issuance (money raised) |
Source: London Stock Exchange (last data June) |
Exhibit 3: LSE AIM issuance (money raised) |
Source: London Stock Exchange (last data June) |
Exhibit 4 tracks the average daily value traded on the Main Market order book and on AIM. The level of trading has increased on the Main Market since the middle of calendar 2021 and AIM volume is at a similar level to the prior year (though well below its recent peak in early 2021). Exhibit 5 shows how the UK Small-Cap index (CBOE) outperformed the All-Companies index from late 2020 but has more recently underperformed in a more risk-averse phase in the market, a feature that is likely to have played into the weakness in issuance seen on AIM.
Exhibit 4: LSE average daily value traded (£m) |
Exhibit 5: UK equity indices |
Source: London Stock Exchange (Main Market order book and AIM) |
Source: Refinitiv, CBOE |
Exhibit 4: LSE average daily value traded (£m) |
Source: London Stock Exchange (Main Market order book and AIM) |
Exhibit 5: UK equity indices |
Source: Refinitiv, CBOE |
Exhibit 6: Financial summary
£'000s |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
2022e |
||
Year end 30 September |
|||||||||
PROFIT & LOSS |
|||||||||
Revenue |
|
|
112,335 |
130,095 |
136,047 |
111,610 |
154,899 |
215,582 |
145,833 |
Administrative expenses (excl. amortisation and depreciation) |
(76,120) |
(83,626) |
(94,603) |
(85,432) |
(105,327) |
(133,651) |
(107,801) |
||
Share based payment |
(6,229) |
(10,454) |
(10,583) |
(10,914) |
(9,961) |
(9,634) |
(6,525) |
||
EBITDA |
|
|
29,986 |
36,015 |
30,861 |
15,264 |
39,611 |
72,297 |
31,507 |
Depreciation |
|
|
(1,126) |
(1,226) |
(1,113) |
(1,124) |
(3,016) |
(4,416) |
(4,566) |
Amortisation |
(125) |
(89) |
(49) |
(44) |
(105) |
(158) |
(258) |
||
Operating Profit |
|
|
28,735 |
34,700 |
29,699 |
14,096 |
36,490 |
67,723 |
26,683 |
Net finance income |
37 |
188 |
212 |
550 |
263 |
(2,288) |
(2,051) |
||
Non-recurring items |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other operating income |
3,759 |
3,431 |
1,733 |
(2,210) |
310 |
8,715 |
442 |
||
Profit before tax |
|
|
32,531 |
38,319 |
31,644 |
12,436 |
37,063 |
74,150 |
25,074 |
Tax |
(6,132) |
(7,942) |
(4,967) |
(3,110) |
(5,713) |
(16,303) |
1,504 |
||
Profit after tax (FRS 3) |
|
|
26,399 |
30,377 |
26,677 |
9,326 |
31,350 |
57,847 |
26,578 |
Average diluted number of shares outstanding (m) |
118.0 |
117.2 |
115.8 |
114.9 |
117.3 |
117.7 |
113.3 |
||
EPS - basic (p) |
23.5 |
27.4 |
25.1 |
8.8 |
29.9 |
54.2 |
24.2 |
||
EPS - diluted (p) |
|
|
22.4 |
25.9 |
23.0 |
8.1 |
26.7 |
49.1 |
23.5 |
Dividend per share (p) |
12.00 |
12.00 |
12.00 |
12.00 |
12.00 |
13.50 |
14.00 |
||
NAV per share (p) |
113.5 |
125.0 |
135.0 |
131.3 |
149.8 |
168.3 |
173.7 |
||
ROE (%) |
22% |
23% |
19% |
6.6% |
21.2% |
33.6% |
14.2% |
||
EBITDA margin (%) |
26.7% |
27.7% |
22.7% |
13.7% |
25.6% |
33.5% |
21.6% |
||
Operating margin (%) |
25.6% |
26.7% |
21.8% |
12.6% |
23.6% |
31.4% |
18.3% |
||
BALANCE SHEET |
|||||||||
Fixed assets |
|
|
5,522 |
6,147 |
8,215 |
6,832 |
12,639 |
52,641 |
47,984 |
Current assets |
|
|
312,462 |
407,850 |
533,033 |
326,641 |
509,034 |
683,319 |
482,072 |
Total assets |
|
|
317,984 |
413,997 |
541,248 |
333,473 |
521,673 |
735,960 |
530,056 |
Current liabilities |
|
|
(188,895) |
(280,371) |
(398,112) |
(195,319) |
(361,397) |
(509,654) |
(303,151) |
Long term liabilities |
(12) |
0 |
0 |
0 |
(2,643) |
(39,580) |
(39,778) |
||
Net assets |
|
|
129,077 |
133,626 |
143,136 |
138,154 |
157,633 |
186,726 |
187,127 |
CASH FLOW |
|||||||||
Operating cash flow |
|
|
48,735 |
43,369 |
45,830 |
(2,748) |
65,953 |
58,329 |
8,320 |
Net cash from investing activities |
84 |
(198) |
(1,014) |
(77) |
(474) |
(9,190) |
(2,020) |
||
Net cash from (used in) financing |
(19,580) |
(36,359) |
(29,035) |
(24,646) |
(24,451) |
(39,857) |
(31,203) |
||
Net cash flow |
|
|
29,239 |
6,812 |
15,781 |
(27,471) |
41,028 |
9,282 |
(24,903) |
Opening net (cash)/debt |
|
|
(59,591) |
(89,002) |
(95,852) |
(111,673) |
(84,202) |
(125,217) |
(134,125) |
FX effect |
|
|
172 |
38 |
40 |
0 |
(13) |
(374) |
332 |
Closing net (cash)/debt |
|
|
(89,002) |
(95,852) |
(111,673) |
(84,202) |
(125,217) |
(134,125) |
(109,554) |
Source: Company data, Edison Investment Research
|
|
Research: Real Estate
In this note, we provide an update on Supermarket Income REIT’s (SUPR) continuing growth prospects following completion of the equity raise in April and entry into the FTSE 250 and EPRA NARIET stock indices. Income growth is supported by acquisitions, mostly index-linked rents, strong tenant covenants and positive structural trends in the market. We expect a continuation of progressive DPS despite increasing debt funding costs.
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