Edison Investment Research - Mercia Asset Management (MERC) Mercia Asset Management - Excellent results despite the tough market

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Edison Investment Research

Richard Williamson

Mercia Asset Management - Excellent results despite the tough market

FY22 was the first year of Mercia’s Vision 20:20 strategy, and a year of real progress for the group. Mercia reported FY22 PBT of £27.4m, with AUM rising marginally to £959m, passing the £1bn mark with £45m of VCT and EIS funds raised post-year-end. Mercia exited Faradion, its second largest holding (4.2x ROI, IRR of 72%) and also completed a major up-round for nDreams, helping to drive net assets up 14% to £200.6m and NAV per share to 45.6p. Mercia trades at 0.65x FY22 NAV/share and at 0.56x adjusted NAV/share (52.5p, including our estimate for the fund management business of 7p per share at 4% of FUM). Based on FY22 EPS of 5.9p (FY21: 7.8p), Mercia trades on a trailing P/E of 5x. With cash of £61.3m at year end, Mercia remains well placed for a downturn, with the potential for opportunistic M&A in FY23.

15/07/2022 1 EN

Underlying

Mercia Asset Management

Mercia Technologies is an investment group focused on the creation/identification, funding and scaling of technology businesses from the U.K. regions. Co. directly invests across four sectors: Software & the Internet, which consists of cyber security, software as a service analytical tool, Adtech and artificial intelligence; Digital & Digital Entertainment, which consists of virtual reality, augmented reality, mixed reality and serious games; Electronics, Materials & Manufacturing/Engineering, which consists of energy and communications, value electronics, and manufacturing applications; and Life Sciences & Biosciences, which consists of diagnostics, digital health and medical devices.

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GB00BSL71W47 London Stock Exchange United Kingdom

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Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Analysts

Richard Williamson

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Mercia Asset Management - Excellent results despite the tough market

A rarity in the sector: Revenue +19%, EBITDA +34%

Positive trading, discount-to-NAV being addressed

A deeply undervalued specialist in private markets

Accsys Technologies - Upgrading guidance for the full year

Topps Tiles - Market outperformance again in FY24

Nabaltec - Resilience and margin expansion

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