Manx Financial Group — Rapid growth tempered by margin pressure

Manx Financial Group (AIM: MFX)

Last close As at 17/07/2024

GBP0.19

0.00 (0.00%)

Market capitalisation

GBP23m

More on this equity

Research: Financials

Manx Financial Group — Rapid growth tempered by margin pressure

Manx Financial Group (MFX) posted record PBT of £3m supported by record new lending of £183m in H123. Conister Bank experienced margin compression of 6% as rising interest rates were passed on to savers more quickly than borrowers. However, group net interest margin (NIM) rose 1.5 percentage points y-o-y to 8.2% as Payment Assist (PAL, currently 50.1% owned) grew rapidly. Altogether, EPS fell to 1.67p/share from 1.89p/share, and net attributable profit declined by 11% y-o-y to £1.9m. The outlook for volume growth remains positive. The anticipated approval of a UK banking licence before year-end will add further funding flexibility into FY24 and the company continues to look for synergistic acquisitions, with general insurance an area of interest.

Written by

Robert Murphy

Managing Director, Financials and Investment Trusts

Financials

Manx Financial Group

Rapid growth tempered by margin pressure

H123 results

Banks

5 October 2023

Price

19p

Market cap

£21m

CET1 ratio (December 2022)

12.4%

Shares in issue

115.1m

Free float

39.4%

Code

MFX

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(11.9)

(14.0)

80.5

Rel (local)

(10.8)

(12.1)

74.3

52-week high/low

29p

12p

Business description

Manx Financial Group is an Isle of Man-based diversified financial services group. Through its subsidiaries such as Conister Bank and Payment Assist, the group operates in resilient niche lending and financing markets in both the UK and the Isle of Man.

Next events

FY23 results

March 2024

Analysts

Rob Murphy

+44 (0)20 3077 5700

Armando Hoxha

+44 (0)20 3077 5700

Manx Financial GroupManx Financial Group is a research client of Edison Investment Research Limited

Manx Financial Group (MFX) posted record PBT of £3m supported by record new lending of £183m in H123. Conister Bank experienced margin compression of 6% as rising interest rates were passed on to savers more quickly than borrowers. However, group net interest margin (NIM) rose 1.5 percentage points y-o-y to 8.2% as Payment Assist (PAL, currently 50.1% owned) grew rapidly. Altogether, EPS fell to 1.67p/share from 1.89p/share, and net attributable profit declined by 11% y-o-y to £1.9m. The outlook for volume growth remains positive. The anticipated approval of a UK banking licence before year-end will add further funding flexibility into FY24 and the company continues to look for synergistic acquisitions, with general insurance an area of interest.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/19

16.5

3.0

1.66

0.00

11.4

N/A

12/20

16.4

2.0

1.37

0.00

12.8

N/A

12/21

20.0

3.0

1.97

0.24

9.6

1.3

12/22

26.1

5.2

3.15

0.38

6.0

2.0

Note: *EPS is fully diluted.

Impressive loan growth expected to continue

Manx grew its loan book 40% in H123 to £343m (H122: £245m), with a loan-to-deposit ratio of 103% (H122: 97%). Net interest income (NII) grew by 56% y-o-y to £16.4m, underpinned by stronger loan volume and higher rates passed through to borrowers. Positively, asset quality remains robust, with group cost of risk (CoR) moderately increasing to 4.9% while the CoR for Conister Bank remained flat at 0.1%. Management expects total loans to reach £400m by end-FY23, 17% above H123, from organic share gains in large addressable markets, but margins will remain challenged until rates begin to fall.

Eyeing up the general insurance market

Historically, Manx has supplemented organic growth with acquisitions intended to gain exposure to niche lending markets that present opportunities of high growth. For example, its 50.1% acquisition of PAL in September 2022 has already proven to be highly accretive and is on track to adding c £1.23m in annualised earnings. Management continues to express an acquisitive appetite, noting its desire – in the chairman’s statement – to enter the general insurance market. A general insurance subsidiary would not only diversify Manx’s earning stream, but would also potentially provide cross-selling opportunities.

Valuation: Implied growth of c 7%

Based on a UK bank peer comparison, plotting return on equity (ROE) against price-to-book value (P/BV), and using annualised H123 figures for Manx, we estimate that Manx should be trading at c 0.75x P/BV compared to its current multiple of 0.7x P/BV. This implies an upside of 7% to c 20p.

H123: PAL contributions offset bank’s margin erosion

In H123, the group lent a record £182.6m, a 65% uplift (H122: £110.9m). Subsequently, this pushed NII up by 56% to £16.4m. Group NIM increased 1.5 percentage points to 8.2% due to the contribution from PAL. Conister Bank, however, experienced margin erosion of 6% as the bank continued to grow its deposits (to fund lending) and passed on rates to savers. The cost of funds for Conister Bank jumped to 3.38% in H123, more than double the 1.59% in H122. Although the majority of lending activities occur through the bank, its subsidiary PAL helped boost margins at the consolidated group level. PAL’s short-term lending structure, highlighted in our April Update note, means that yields are far higher than Manx’s conventional lending activities. PAL is able to turn over one-year funding from Conister Bank c 1.2 times, which provides a useful counterbalance since PAL’s lending reprices faster than Conister Bank’s traditional lending. The combination of faster repricing on the lending side and the faster turnover on the loans allowed group NIM to increase respectably.

The group attempted to soften some of the margin pressure through expanding the loan-to-deposit ratio, which stood at 103% in H123 (H122: 97%). Notably, the loan book was up 40% y-o-y to £343m and this volume growth drove core operating income up 36% to £15.6m.

The group continued to focus on restraining fee and commission expenses. In H123, fee and commission expenses represented less than 1.4%, or £3m, of advances compared to 1.2% in H122. However, weak investor sentiment persisted. As a result, commissions earned in its financial advisory business – £2.2m – were not enough to overcome the expenses, leading to a net fee loss of £0.8m. Operating expenses rose 41% to £10m, predominantly in the form of personnel costs as Manx continued hiring staff to facilitate the opening of its UK deposit-taking branch. As is the case with other lenders, the group also bore the cost of underlying inflation. Furthermore, Manx has embarked on a multi-year, multi-million-pound IT investment programme as it focuses on scaling up the business, improving customer-facing technology and obtaining the infrastructure to continue adhering to compliance policies. This will increase efficiency in the medium to longer term but act as a headwind to profit during the implementation period.

Relatively in line with loan book growth, impairment charges increased 45% to £3.3m. Common with other UK lenders, Manx has increasingly placed emphasis on prime lending. This has allowed moderation in its CoR. Group CoR rose 1.5 percentage points to 4.9%, partly due to front loading stage 1 provisions due to loan growth. Notably, CoR for Conister Bank remained in line at 0.1%.

With a combination of strong operating performance and CoR, PBT rose 30% to £3.0m. However, net attributable profit fell 11% to £1.9m as the minority interest from the six-month contribution from PAL was removed from the consolidated accounts (see Minority interest explanation and Exhibit 2 below for further explanation). Resultantly, EPS fell to 1.67p/share, down 11% from 1.89p/share in H122. However, positively, Manx has maintained a strong ROE with an annualised 17.1% (FY22: 17.4%) according to its own definition. Manx uses net profit – before minority interest is deducted – to calculate its ROE whereas Edison uses net attributable profit to shareholders (after the minority interest has been deducted). Edison’s annualised H123 ROE is 12.7%

Exhibit 1: Profit and loss account – selected numbers

£’000s unless stated otherwise

H121

H221

H122

H222

H123

y-o-y

Net interest income

8,555

9,425

10,532

13,820

16,384

56%

Net fee income

478

804

986

164

(798)

(181%)

Depreciation on leasing assets

(173)

(96)

(16)

0

0

(100%)

Core operating income

8,860

10,133

11,502

13,984

15,586

36%

Other operating income

129

236

275

39

62

(77%)

Gains on securities and asset revaluations

(1)

690

(113)

386

664

(688%)

Total operating income

8,988

11,059

11,664

14,409

16,312

40%

Operating expenses

(5,879)

(6,910)

(7,059)

(9,831)

(9,986)

41%

Operating profit before impairments

3,109

4,149

4,605

4,578

6,326

37%

Impairment on loans and advances

(2,142)

(2,218)

(2,268)

(1,722)

(3,294)

45%

Associates profit

59

(27)

0

18

0

N/A

VAT recovery

113

0

0

0

0

N/A

Profit before tax

1,139

1,904

2,337

2,874

3,032

30%

Income tax expense

(122)

(112)

(160)

(377)

(493)

208%

Net profit

1,017

1,792

2,177

2,497

2,539

17%

Minority interests

12

(28)

(16)

(327)

(612)

3725%

Net attributable profit

1,029

1,764

2,161

2,170

1,927

(11%)

 

Key ratios

 

 

 

 

 

 

EPS (p)

0.89

1.57

1.89

1.88

1.67

Diluted EPS (p)

0.73

1.24

1.48

1.45

1.30

NIM (NII/average assets)

6.2

6.4

6.7

7.9

8.2

 

NIM (NII/average interest earning assets)

6.6

6.7

7.1

8.4

8.8

Group cost of risk (%)

2.9

3.7

3.4

4.7

4.9

 

Cost income ratio (%)

65.4

62.5

60.5

68.2

61.2

 

Annualised ROE* (%)

9.1

14.7

16.7

15.4

12.7

 

Loan-to-deposit ratio (%)

91.5

90.4

96.6

95.8

103.2

 

Source: Manx Financial Group, Edison Investment Research. Note: *Edison uses net attributable profit and average shareholder equity in our calculation.

Minority interest and PAL explained

In September 2022, Manx announced its 50.1% acquisition of PAL for £4.2m. Manx has the option to buy the remaining 49.9% for a variable cash consideration of two times average net profit of PAL, capped at £5m, by FY26 (see our last note in the ‘Further upside optionality of Payment Assist’ section for more detail). Under IAS 27, since Manx owns the majority of PAL, it must consolidate all of PAL’s revenues, costs and profit in the group accounts and then deduct the 49.9% of net profit attributable to minority interest after taxes.

As virtually all the group £0.6m minority interest charge relates to PAL, an acquisition of the minority interest would be highly accretive on current run rates and PAL is on track to deliver an annualised c £2.5m in profit in FY23 (or c £1.23m in profits attributable to Manx shareholders). Should Manx acquire the other half of PAL, the minority interest will be expunged, and all profits would accrue to Manx shareholders. We show this effect in Exhibit 2 where, if Manx had owned PAL wholly (and ignoring any additional after-tax financing cost), EPS would have appreciated 32% to 2.21p/share from its actual earnings of 1.67p/share. This is also 17% higher than H122 EPS.

We highlight that this is quite a simplified analysis. Should Manx acquire PAL for £5m in cash, its balance sheet equity would instantly decrease to £26m but rise to £29m by the end of the year as PAL’s earnings feed into equity and partially offset the £5m reduction. Based on this calculation, annualised ROE would be 18%, above our current annualised ROE of 12.7%. Additionally, it is worth noting that the debt-to-equity ratio, ie leverage, would also increase to 1.4x (currently 1.3x).

Exhibit 2: H123 selected numbers profit and loss account – the PAL effect

£’000s unless stated otherwise

With 50.1% ownership of PAL

If Manx owned 100% of PAL

Profit before tax

3,032

3,032

Income Tax

(493)

(493)

Net profit

2,539

2,539

Minority interest

(612)

0

Net attributable profit

1,927

2,539

EPS (p)

1.67

2.21

Source: Edison Investment Research

Credit analysis: Asset quality is robust

Over the past few years, as is a common theme with other UK lenders, Manx has shifted the loan book towards mostly prime lending. Although this implies a lower interest yield on assets, it means asset quality tends to be much better, resulting in attractive and less volatile risk-adjusted returns.

In Exhibit 3, we highlight that loans overdue 30 days as a percentage of gross loans have trended downwards over the last couple of years, and even dipped below 10% in H123 as the group grew prime lending rapidly. Coverage of stage 2 and 3 impairment allowances as a percentage of stage 2 and 3 overdue more than 30 days is robust at 46% (H122: 31%) and slightly above the 44% in FY22.

Additionally, total stage 2 and 3 loans in aggregate actually fell slightly in absolute terms in H123 versus H222. Exhibit 4 shows total stage 2 and 3 loans as a percentage of gross loans was 8.7%, significantly improved from 10.4% in H122 as Manx benefited from increased customer quality.

Exhibit 3: Overdue loans and impairment allowance

Exhibit 4: Stage 2 and 3 as a percentage of gross loans

Source: Manx Financial Group, Edison Investment Research

Source: Manx Financial Group, Edison Investment Research

Exhibit 3: Overdue loans and impairment allowance

Source: Manx Financial Group, Edison Investment Research

Exhibit 4: Stage 2 and 3 as a percentage of gross loans

Source: Manx Financial Group, Edison Investment Research

Looking ahead: UK licence, acquisitions and margin pressure

Management stated that the process of obtaining a UK banking licence is on track and it expects a response from regulators before the end of the year. A UK licence would give additional funding flexibility for the group and help balance the geographic funding profile. From a lending point of view, and despite the competitive UK market, a UK branch has promising potential. Manx estimates the market size for small and medium-size enterprise lending to be £15.7bn. Currently, Manx holds about 1.8% of UK market share while non-bank lenders make up 36%. Although Manx already lends to the UK, a deposit-taking branch would help boost its operations and brand image.

Manx has employed acquisitions successfully as a means of achieving growth in strategically attractive segments of the market. The group will continue to look for acquisitions to supplement its already strong organic growth. One of these markets is general insurance. Entry into the general insurance market will further enhance the earnings diversity of the group alongside providing cross-selling opportunities with its other subsidiaries.

From a macroeconomic perspective, the environment remains difficult to predict. Management believes that market conditions will remain challenging until Q224 – assuming market expectations that the UK would have reached the peak of the interest rate cycle and possibly begun the trek downwards.

However, as deposits are shorter-term products, they continue to reprice faster than loans and we expect to see further margin pressure. At the time of writing, Conister Bank is offering a 5.3% average savings rate on its fixed-term deposit accounts (with a maturity between six months and three years) and an average of 4.8% on its notice deposit accounts (maturities between 95 days and 180 days). Although we do not know the exact deposit mix, we can expect the cost of funding to increase from the current 3.38% as deposits are repriced to reflect updated rates. This will further put margin pressure on Manx as the longer duration loan book has a slower repricing cycle. Should rates rise, then one would project more margin erosion.

However, if rates come down as indicated by forward rate curves, Manx can expect its margins to expand favourably as deposits reprice faster to lower rates while it still collects interest on loans made at higher rates (and indeed some loans will still be repricing upwards). An additional offset to the current margin environment is PAL, which has a very short duration loan book. We highlight that for the year, management has guided to c £0.4bn in advances (FY22: £0.3bn), with a 20:80 split between the Isle of Man and the UK, which suggests it does not see a funding constraint for the business.

Valuation

Manx currently has no consensus forecasts. In Exhibit 5, we have selected a varied list of small and mid-cap UK banks and specialist lenders with similar operations to Manx. We highlight that Manx trades broadly in line with peers on a 2023e P/E and P/BV basis. However, Manx has a better ROE by 3.8pp (compared to average) and 2.5pp (compared to average excluding Metro Bank), respectively. Manx is a small company, especially when compared to peers, and hence yields less as it is still in its growth stage and therefore less inclined to focus on returning capital to shareholders through dividends. Nonetheless, a 2.1% yield looks respectable.

Exhibit 5: Peer comparison table

Price (p)

Market cap (£m)

P/E 2022 (x)

P/E 2023e (x)

P/BV
(CY1, x)

ROE
(CY1, %)

Dividend yield (%)

Close Brothers

860

1,288

11.7

N/A

0.8

7.0

7.9

Virgin Money

154

2,057

5.0

5.0

0.4

7.2

6.5

Metrobank

51

87

10.0

10.0

0.1

1.5

N/A

OneSavings Bank

305

1,201

4.2

4.2

0.6

15.6

10.0

Paragon

473

1,029

5.5

5.5

0.7

14.1

6.1

Vanquis

116

297

8.1

8.1

0.5

7.6

13.2

Secure Trust Bank*

628

125

3.6

4.0

0.4

9.5

6.3

Manx Financial Group**

19

21

5.2

6.4

0.7

12.7

2.1

Average

869

6.9

6.1

0.5

8.9

8.3

Average ex-Metro

999

6.4

5.4

0.6

10.2

8.3

Source: Refinitiv, priced at 5 October. Note: *Edison estimates used for Secure Trust Bank. **Annualised H123 figures for Manx Financial Group.

In Exhibit 6, we graph ROE against P/BV for all peers and plot a line of best fit. We can see that in regard to the line of best fit, Manx is trading at a discount. To trade closer towards the line of best fit, Manx should be trading at a book value of c. 0.75x, or a price of c 20p, inciting a 7% uplift from the price at the time of writing.

Exhibit 6: ROE vs P/BV

Source: Refinitiv, priced at 5 October. Tickers: Metro Bank (MTRO), Secure Trust Bank (STBS), Virgin Money (VMUK), Vanquis (VANQ), Manx Financial Group (MFX), OneSavings Bank (OSBO), Paragon (PAGPA) and Close Brothers (CBRO).

Exhibit 7: Financial summary

Year-end 31 December

FY18

FY19

FY20

FY21

FY22

£m except where stated

Profit and loss

Net interest income

15,568

17,929

15,470

17,980

24,352

Net commission income

(2,738)

(1,630)

384

1,282

1,150

Other income

336

233

551

785

571

Total operating income

13,166

16,532

16,405

20,047

26,073

Total operating expenses

(9,748)

(11,632)

(11,394)

(12,789)

(16,890)

Operating profit pre impairments & exceptionals

3,418

4,900

5,011

7,258

9,183

Impairment charges on loans

(857)

(1,900)

(3,950)

(4,360)

(3,990)

Associates

30

124

54

32

18

VAT recovery

119

(101)

906

113

0

Operating profit post impairments

2,710

3,023

2,021

3,043

5,211

Non-recurring items

0

0

0

1

0

Profit before tax

2,710

3,023

2,021

3,044

5,211

Corporation Tax

(243)

(350)

(53)

(234)

(537)

Tax rate

9%

12%

3%

8%

10%

Profit after tax

2,467

2,673

1,968

2,810

4,674

Minority interests

0

0

(33)

(16)

(443)

Net income attributable to equity shareholders

2,467

2,673

1,935

2,794

4,331

Shares and per share ratios

Average basic number of shares in issue (m)

131.1

131.1

119.0

114.3

114.8

Average diluted number of shares in issue (m)

172.8

172.8

155.5

150.8

153.8

Period end shares in issue (m)

131.1

131.1

114.1

114.3

115.1

Reported EPS (p)

1.88

2.04

1.65

2.46

4.07

Reported diluted EPS (p)

1.54

1.66

1.37

1.97

3.15

Reported DPS (p)

0.00

0.00

0.00

0.24

0.38

NAV per share (p)

11.4

12.9

14.4

16.6

19.4

Tangible NAV per share (p)

8.9

9.4

10.1

10.7

10.7

Income ratios and per share

Net interest/average loans

11.5

10.9

8.3

8.5

9.4

Impairments /average loans

0.6

1.2

2.1

2.1

1.5

Cost income ratio

74.0

70.4

69.5

63.8

64.8

Return on average equity

13.3

12.7

8.7

11.8

15.9

Return on average TNAV

17.2

16.9

12.3

17.6

28.6

Balance sheet

Net customer loans

148,278

179,370

193,143

229,251

291,475

Other assets

48,636

73,517

74,818

79,502

87,786

Total assets

196,914

252,887

267,961

308,753

379,261

Total customer deposits

158,500

209,933

218,285

253,459

304,199

Other liabilities

18,691

20,635

27,241

30,309

45,292

Total liabilities

177,191

230,568

245,526

283,768

349,491

Net assets

19,723

22,319

22,435

24,985

29,770

Minorities

0

0

84

56

189

Shareholders' equity

19,723

22,319

22,351

24,929

29,581

Reconciliation of movement in equity

Opening net assets

Profit in period

2,467

2,673

1,968

2,809

4,674

Other comprehensive income

(6)

(77)

(292)

236

538

Ordinary dividends

0

0

0

(185)

(217)

Minority changes from subsidiaries

0

0

(1,560)

(310)

(210)

Closing net assets

19,723

22,319

22,435

24,985

29,770

Balance sheet ratios

Loans as % deposits

93.6

85.4

88.5

90.4

95.8

Loans to equity (x)

7.5

8.0

8.6

9.2

9.7

Stage 3 as % loans

0.7

3.5

7.2

4.4

4.5

Impairments as % stage 3 loans gross

81.5

45.3

34.7

47.8

52.7

Total capital ratio (%)

18.1

16.9

19.1

19.1

15.3

Source: Manx Financial Group, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Manx Financial Group and prepared and issued by Edison, in consideration of a fee payable by Manx Financial Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Manx Financial Group and prepared and issued by Edison, in consideration of a fee payable by Manx Financial Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Manx Financial Group

View All

Latest from the Financials sector

View All Financials content

Research: TMT

Datatec — Sustained demand in H124

In its H124 trading update, Datatec noted that all divisions reported improved performance versus H123. Westcon’s performance was described as excellent, with a strong performance from Logicalis International and a much-improved performance from Logicalis Latin America, although macroeconomic pressures remain in the region. The company continues to see good demand for its solutions and services and is actively managing supply chain challenges to service customers. We maintain our forecasts pending interim results due on 23 October.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free