Numis Results Thread

5th Dec '18 by InvestorJohn

4 comments 1850 reads

Numis (LON:NUM) Final results out this morning showing record revenues for the 3rd year in a row but reading on not sure what to make of the overall picture

Stockopedia has listed their EPS estimate at 19.8 so I suppose the 25.1 achieved is better than expected.

Dividend is maintained at 12p for the full year

CEO says:

"This has been a year of investment in people which, whilst impacting profitability, has strengthened our competitive position, expanded the range of services available to our clients and enhanced the overall quality of the Numis platform."

They had already said this in their previous results so the market priced in the reduced profit that they mentioned - and since the market didn't know hat that stage how much profit would be reduced by, the share price took quite a hit!

They have also closed their Asset management business which was basically a Numis selected Fund of companies and returned the money to the fund's investors.

Brexit and the current market turmoil leaves some of their Deals and IPOs etc a bit "unpredictable" so a resolution to Brexit or trade wars and some resulting stability would help here for sure...

My Opinion:

I think the re rating for the dip in EPS has been fully priced in and these should now hold their current price. I am not sure that I would by for the first time at this stage to see how their investments pan out but don't think I will sell for now either!

Disclosure: I am long Numis currently

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Merlotman

5th Dec '18

Investorjohn
I am long as well
I have only scanned the RNS so far but I agree that this is an earnings beat against broker estimates per your numbers. The increase in staff costs had been well flagged so there should be no surprise that op profits are down. However the increased YE cash balance is a bonus
I think the slightly negative market response today is in respect of the Curent Trading and Outlook statement which strikes a very cautious note for the year ahead
In my view although Numis (LON:NUM) will continue to be tied to the fortunes of the small / mid cap market I think they are a quality operator and wil outperform in the longer term

InvestorJohn

6th Dec '18

I can see that their stock report has been updated & downgraded since yesterdays results

Stock Rank has dropped to 58 and it has changed to passing no screens!

It was in 4 Screens before the results

One of the reasons I had bought originally as it had met nicely all of Jim Slaters Zulu principles like PE PEG etc

29th Mar '19

Trading Update out this morning...

This is for the six month period ending 31 March 2019.

More of the same here with some light at the end of the Tunnel

From their Update

Negatives are:

political situation remaining uncertain,
market environment has been challenging throughout the first half
revenue approximately 26% lower than the first half of the prior year. Equities revenues are lower than the comparative period reflecting depressed activity levels and the prevailing investor sentiment toward the UK...
execution of our pipeline will likely be influenced by the evolving political outlook and the associated impact on our corporate and institutional clients. (This could be positive or negative impact)

Positives are:

Numis has achieved strong market share gains
Corporate Broking & Advisory revenues are expected to be in line with the second half of the prior year.
Average deal fees have increased compared to the previous six months offsetting the impact of lower deal volumes.
Our pipeline has grown in recent weeks with a notable increase in M&A opportunities.

Numis has benefited from an improvement in trading in recent weeks...
half year results for the six months ending 31 March 2019 will be made on 3 May 2019.

My View

I am still long here.... only just as it is sitting right on my sell threshold. I think the reduced revenue and impact of the political uncertainty is priced in at these levels

I would expect some recovery if we get some conclusion to Brexit sooner rather than later. Businesses and some investors will be sitting on the sidelines waiting on a conclusion before progressing with Mergers acquisitions, listings and investments etc these are all the things that give Numis their earnings...

I also note share buybacks are still continuing in the meantime which may support the price a bit.

So in conclusion if it falls any further I am out to move my funds to somewhere with a more positive current sentiment.

jwebster

31st Mar '19

Numis (LON:NUM)
Look cheap. Market cap 266m with 140m cash on hand. So on last year's PAT of 26.7m their PE is theoretically only 4.7x

However, some of that cash pile is required capital for regulatory reasons, so is not all available for acquisitions, dividends, etc.

Their recent guidance indicated a 26% reduction in revenue. If that held for the full year that implies a revenue drop of 35m on last year's 136m revenue. That's huge and given costs are largely fixed staff costs, it would overshadow their operating profit of 29.7m

So that's the thing, a 26% reduction in full year revenue will drive EPS down to maybe even nil. If Brexit ended and transactions restarted, they would be off again.

I don't own any, but I can see the argument to buy a few and stick in the drawer, wait two years for market activity to come back again. That would have to be the buy case. Half year numbers will be released on 3 May. Tough call this one in front of Brexit events likely to unfold in April.

Numis Results Thread

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InvestorJohn

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