H1-24 showcases benefit of diverse income streams
H1-24 revenue (to 30 Nov 23) was up 8% y-o-y to £59.1m (H1-23: £54.9m), with 4% organic revenue growth. H2 revenue is typically higher than H1 due to end of tax-year advice and H2 bias of client year-ends, and we maintain our FY24 revenue forecast of £123.6m (+11% y-o-y). Adjusted EBITDA grew 10% from £15.0m to £16.5m with positive effects from organic growth (409 new clients, +13% over H1 23) and a changing revenue mix towards higher-yielding services.The core pensions business was the standout performer with 21% revenue growth, driven by strong demand for advice and increased banking margin on cash balances.
MW has a strong net cash position of £32.7m, after paying £9.3m of dividends and £6.2m of acquisition-related payments. MW has no debt. Management maintains a confident outlook, with the interim dividend up from 8.8p to 9.0p.
Our revenue forecasts are unchanged with adjusted EBITDA forecasts down slightly due to lower Amati profits but statutory profits increase on higher net finance income. Our fundamental valuation remains unchanged at 900p per share (53% above the current share price). With powerful longer-term structural tailwinds supporting the wealth management sector (see page 16), we think a sector-median PER of 15.7 is too low. Moreover, with MW being so well positioned (page 17), we find it strange it’s PER of 12.3 is below this median. We see potential for a re-rating.
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.
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