Initiation: Growth potential with a prospective 6.9% yield
Following the IPO placing of 17.5m shares, NAHL has traded on AIM since 29 May 2014. The group has adapted well to the new legal environment in the fragmented UK personal injury (PI) sector following the April 2013 substantive changes in how the consumer litigation market may operate. Over the past 20 years, NAHL has created significant competitive barriers to entry via high media spend, marketing know-how and long-established law firm relationships. The group's highly recognised Underdog character helps promote the brand. We have analysed the group's ongoing business and we initiate FY14 and FY15 estimates, which show solid revenue and strong EPS growth. The group also has strong operating cash flow and a high free cash conversion ratio, enabling management to indicate that c two-thirds of retained profit is to be paid as dividends to shareholders.NAHL Group is a marketing and services business focused on the U.K. consumer legal market. Co. operates across the Personal Injury division through its subsidiary, National Accident Helpline Limited, which validates the legitimacy of consumers' claim and connects them to a law firm. Co. operates across the Critical Care division through its subsidiary, Bush and Company Rehabilitation Limited, which provides case managers and witnesses to solicitors and insurance companies in support of injury victims. Co. operates across the Residential Property division through its subsidiaries, Fitzalan Partners Ltd and Searches U.K Limited, which provides conveyancing, searches and survey services.
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