What’s new?
Mortgage Advice Bureau (Holdings) Plc (LON:MAB1) full year results for the year to 31 December 2016 are marginally ahead of the detailed pre-close statement released on 27 January. In summary:
* MAB’s 2016 revenue was up 23% to £92.8m compared to preclose “23% rise to £92m” and Zeus forecast of £92.5m
* The average number of MAB Advisers rose 23% to 888 in 2016
* The total number of MAB Advisers rose to 950 (up 20% in 2016)
* Group adj PBT including FSCS levies but excluding exceptional gain was £12.5m (Zeus forecast of £12.3m including FSCS & £12.7m ex FSCS)
* At year end MAB has £18m of cash, including >£10m of unrestricted cash
* The final DPS of 10.5p makes a total DPS of 18.3p (Zeus forecast 18.2p); in addition MAB shareholders have received special dividends of 5.35p;
Management outlook is clear and consistent: management is confident that MAB can “continue to grow [its] market share year on year and deliver attractive returns to investors.”
Zeus Capital view
2016 revenue, profit, EPS and DPS are in line our expectations.
MAB’s revenue and profit growth is principally driven by rising adviser numbers. We expected MAB to have 940 advisers on 31 December 2016. In 2017 MAB has already added a further 26 advisers to 976. As we are confident growth in advisers will meet management’s target of 15% pa, our revenue forecasts are unchanged.
We made a few detailed changes to our forecasts such as including FSCS levies and nudging up our gross profit expectations. Overall these changes cut forecast adj EPS by 1.6%. This change is immaterial, so our 2017 DPS is unchanged.
Valuation
At 360p Mortgage Advice Bureau (Holdings) Plc shares are trading on 15.6x current year’s earnings and 5.8% dividend yield with prospects of 19% growth in 2018. At 420p MAB shares would trade on 18.3x current year’s earnings and on a 5.0% dividend yield.
