Impressive start to next leg of growth journey
MTW has a team of 185 client-facing consultants which gives it control over distribution; it operates its own administrative platform which allows it to capture operational economies of scale; and it has a differentiated suite of investment products giving consultants an advantage over competitors.The group has a record of achieving ambitious goals. In 2014, with client assets of £4.5bn and revenue of £29m, it set medium-term goals of £15bn of client assets and £100m of revenue. It hit those in FY22 and is now targeting £30bn of AUM, £300m in revenue, and £100m in EBITDA.
FY22 (to 31 May 22) has seen an impressive start to this journey. Client assets grew by 23% from £12.1bn to £14.9bn, revenue 73% from £62.6m to £108.2m, and adjusted EBITDA 88.4% from £17.3m to £32.6m. The balance sheet is strong, with net assets of £230m, cash and equivalents of £54m, and no debt. A dividend of 26.1p has been proposed, producing a yield of 4.0%.
It also has the potential to exceed our forecasts. Operating in a huge market with substantial tailwinds, the business model provides significant competitive advantages, and it has a long track record of finding and executing value accretive acquisitions.
For valuation we apply a DCF methodology with what we believe are conservative assumptions, and note that the PER of 13.7 is only at the peer group median level - despite its growth prospects.
Our fundamental valuation is 950p per share, which is 44% above the current share price.
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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