FLASH: Tier 2 bond refinancing and upsize

Secure Trust Bank - In line, with good momentum

In its FY22 post-close trading update, Secure Trust Bank (STB) announced that business has been trading in line with management expectations and with good momentum. Continuing profit before taxes and impairments was ‘significantly’ up, while its cost to income ratio ‘improved markedly’. Core loans rose by 19.1% y-o-y (we forecast 13%), with strongest growth in consumer finance as expected. New business lending did drop 11% y-o-y for Q422 as the bank tightened its lending criteria (as previously

FLASH: In-line pre-close update

Secure Trust Bank - Revised forecasts reflect macro concerns

We are adjusting our forecasts for Secure Trust Bank (STB) to better reflect the deteriorating economic outlook in the UK. We have raised our FY22 forecast for PBT from continuing operations by 1%, but reduce it by 15% in FY23. Lower loan growth in 2023 is the key driver; we now estimate growth of 13% in FY22 and 7% in FY23. The impairment charge rate for FY23 has been upped from 1.3% to 1.4%. We have also raised our run-off cost estimates in discontinued operations by £2.6m and £2.0m for FY22 a

Very mispriced

Secure Trust Bank - Prudence despite resilience

In its Q322 trading update, Secure Trust Bank (STB) said business has been trading in line with management expectations. Loan demand has remained strong in its consumer finance niches. However, the bank says it is slowing growth, tightening lending criteria and increasing its focus on operational efficiency to reflect macroeconomic uncertainty. Total loans in Q322 grew 21.5% y-o-y to £2,813m; we are forecasting 15.8% increase for FY22. Asset quality has remained good while the net interest margi

A prudent approach to lending

Secure Trust Bank - Solid interim results

Secure Trust Bank (STB) reported H122 PBT of £24.7m, including an £8.1m gain on the disposal of its Debt Managers Services (DMS) unit. Reported return on equity (ROE) was 12.5%, and the underlying ROE was 8.3%. Pre-provision operating profit was up 22% y o y driven by a 23% increase in core loans. Underlying earnings were down 52% y-o-y as impairments returned to a normal level (annualised 1.4% of loans in H122) after the unusually large COVID-19 related loan reversals in H121. STB’s capital pos

Updating forecasts post H1'22 results

Storebrand may find momentum earlier than expected

Storebrand’s H1 22 results were very strong and offered a glimpse of the profitability potential once the short-term negative effect of higher rates and inflation is absorbed. While we had expected a tougher quarter on profitability, the performance delivered and metrics disclosed imply very little probability of headwinds ahead. In a tough macro-economic environment, Storebrand’s idiosyncratic risk-return profile now seems very attractive.

Secure Trust Bank - Strong loan momentum in Q122

Secure Trust Bank disclosed in its Q122 trading update that balance sheet momentum is strong and the business remains on track to deliver on management’s medium-term growth targets. Loan and core loan growth were 4.5% and 4.8%, respectively, in the three months to 31 March. We are forecasting 17% and 18% growth for the full year. Deposit growth was similarly fast paced with a 4.1% increase in the three months and on track for our forecast of 17% for FY21. We note, however, that the economic slow

Ultimately a safe haven despite the high price?

Storebrand has released a very robust set of Q1 22 results. While we tend to qualify the war’s ripple effect to be, so far, moderate to low we believe that the firm’s structure could actually enable it to navigate these uncertain times driven by inflation, potential recession and tumbling markets. The announced NOK500m share buy-back is a move in this direction with a demonstration of confidence.

Secure Trust Bank - FY21 earnings beat with momentum

Secure Trust Bank (STB) reported FY21 PBT of £56.0m (£57.4m normalised, we forecast £52.7m) and a ROE of 15.9%. The beat was driven by provision reversions: the loan loss ratio was 0.1% versus 0.3%. The numbers otherwise were in line with our expectations. Revenue was flat year-on-year, but pre-provisions profit fell by 18% since costs rose 12% as STB invested for growth. We are forecasting 15–17% annual loan growth for FY22–23 as management sees good risk-adjusted opportunities despite the infl

Strong CY21 results

Uncertain outlook comes as no surprise

We take a positive view of Legal & General’s FY 22 results. Despite the tough environment, the Group managed to outperform expectations – something which was hardly a given for such a large asset manager. With L&G being widely exposed to the UK economy, it might be a call one does not want to make but the firm’s business remains one of spreads – as long as a default does not occur. We remain positive but concede that L&G embeds more risk than we had assumed.

Very strong CY22 - CY23 upgraded 10%

LIBERUM: Alpha Group International* - Highly attractive global growth opportunity

Ambitious winds of change

M&G’s FY 22 results were strong. It was also the opportunity for new CEO Andrea Rossi to depict clearly his strategy for the upcoming months. While the impetus is clear and the objectives are ambitious, we rather believe in a structural improvement of the business (driven by the higher rates environment) than a commercial one.

Hybridan Small Cap Feast - 06 Mar 23

6 March 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objective

Belvoir Group - Debt free, entrepreneurial and diverse

2022 followed on from the strongest year for property in recent history, but Belvoir has, nevertheless, reported a robust set of full-year results further evidencing the power of its franchised model and strategy. FY 2022 revenue was up +14% (+2% like-for-like), gross profit up +6% and adj. PBT down -1% as the resilient Lettings income and expanding Financial Services business continued to grow (both +4% LFL), while housing Sales fell (-15% LFL) as market conditions weakened and administrative c

Morning Note – 27 March 2023

LIBERUM: Real Estate Investors* - Profitable sales drive valuation increase and NTA outperformance

Hybridan Small Cap Feast - 14 Mar 23

14 March 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

Critical Metals Plc - Initiating Coverage - 20th March 2023

Critical Metals is a British company that has acquired a 70% interest in a producing Molulu copper mine in the Katanga region of the DRC. The focus of the company is in the natural resources sector in Africa focused on the strategic or critical metals as defined by the United States Government Survey list in Open-File Report 2018-1021 and the Critical Raw Minerals as defined by the European Commission. The main catalysts for 2023 will be the announcement of the first sales of copper ore. This i

LIBERUM: Pollen Street * - Clear fundraising momentum

NAHL Group - Finals

NAHL generated growth in both its Personal Injury (PI) and Critical Care divisions, the former despite a continuation of subdued market conditions – hence market share gains. Results were in line with our forecasts but with a significant reduction in net debt which is especially welcome in the current high interest rate environment. Group strategy remains intact and in PI that means building the embedded value of future cash flows in NAL while flexing enquiry placements to maximise cash generati

Positive update - EPS upgraded by 5% p.a.

H&T (initiation of coverage): Pawnbroking royalty, with strong, profitable growth

Founded in 1897, H&T is the UK’s leading pawnbroker, with 269 stores, and it has gained a strong pawnbroking market share in recent years. While it is growing ancillary gold buying and forex products, its core is pawnbroking and related retail services. As other small-sum, short-term lenders have withdrawn, H&T’s well-capitalised, low-risk proposition has unique growth opportunities, with the pledge book up over 50% in 2022. The lessening of legitimate competition at a time of heightened demand

Interims in line, undervalued high quality income stream

Income quality stands out here: lfl rental growth continues, occupancy is full and rental collection is strong. The asset class is demonstrating the ability to perform in challenging conditions, reflecting the structural undersupply of high quality PRS homes in the UK. Pre-announced, EPRA NAV was largely unchanged at 117p in H1 with no yield compression and all rental earnings distributed. We make no changes to forecasts at this stage. We see an attractive total return with the shares trading at