Considerably ahead of market expectations
We have upgraded our FY21e forecasts in line with the year-end trading update, which confirmed an outcome expected to be comfortably ahead of market expectations. The key driver was a strong Q4 performance by both operating divisions: FY21 revenues are now expected to come in at c £83.7m (FY20: £70.5m) and adjusted PBT at c £11.5m (2020: £9.2m), which reflects continued overall margin enhancement. Positive operating cash flow will see BEG end FY21 with £3.0m of net cash (end FY20: £2.8m net debt), also well ahead of expectations.Business recovery and financial advisory saw c 20% revenue growth and margin improvement. The underlying (organic) revenue run rate from insolvency activities was maintained despite suppressed market activity levels, and corporate finance completions underpinned a strong H2 performance by advisory. Recent acquisitions CVR Global (January 2021) and David Rubin & Partners (March 2021) are performing well.
Property advisory and transactional services saw c 15% revenue growth, profit broadly maintained despite significant Q1 impact of first lockdown. Activity and transaction levels recovered to pre-lockdown norms in Q4, with no adverse impact from second or third lockdowns.
This update further underpins our fair value for Begbies at 165p / share, equivalent to an 18.3x FY22e PER and a 1.9% prospective yield (2.8x covered by adjusted earnings).
Begbies Traynor Group is a business recovery, financial advisory and property services consultancy. Co. provides these services through two operating segments: business recovery and financial advisory services, which provides transactional support, valuations and advisory services through its subsidiary, BTG Financial Consulting LLP; and property services, which delivering advisory, such as commercial property valuations, property receiverships, property management and accounting, and as well as transactional services that include property auctioneers, machinery and business asset auctioneers to owners and occupiers of commercial property, investors and financial institution.
Mattioli Woods provides pension consulting and administration, wealth management, asset management and employee benefits consultancy. Co.'s operating segments comprise:Pension consultancy and administration, which include setting up and administering pension schemes, as well as providing consultancy services for one-off activities; Investment and asset management, which manages and placing of investments on behalf of clients; Property management, which manages collective property investment vehicles, facilitates direct commercial property investments on behalf of clients; and Employee benefits, which assists its corporate clients with employee engagement.
1PM is engaged in providing financial services to U.K. businesses.
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