Afh Financial Share Discussion Threads

[rivaldo] 11/11/2019 08:24

Impressive numbers - and a confident outlook.

Given the change of focus to cash generation and away from acquisitions the numbers were below Liberum's forecasts.

They've revised their numbers on the new model, and now go for:

last year - 28.5p EPS, 8.7p dividend
this year - 32.7p EPS, 10p dividend
next year - 35.6p EPS, 11p dividend

They have a new target price of 484p.

So the current year P/E is down to around 8.7, due to the prior concerns re cash generation (according to Liberum). Those concerns should now be addressed - if so,
there is serious upside here.

[cheshire man] 11/11/2019 08:14

Nicely :-0

[soundbuy] 11/11/2019 07:53

That'll do :)

[eentweedrie] 11/11/2019 07:30

excellent update

[dexdringle] 09/11/2019 13:45

But surely the free cashflow will partly be used to satisfy deferred consideration for previous purchases - so how are they going to also have sufficient monies to make the volume of acquisitions required to enable them to buy sufficient FUM to hit their own FUM target of £10bn ?

[ronwilkes123] 09/11/2019 13:23

No the current aim is to reduce debt and use cash flow to fund purchases. Obviously not at the same pace as before. Low debt high cash flow won’t have any issue raising cash when necessary, a slower pace for now for afhp, that’s not a problem to investors that can wait dex

[dexdringle] 09/11/2019 13:11

I mean the appetite of investors to provide further funding. The cashflow wont be sufficient to fund the levels of growth required to add the extra £5bn FUM (doubling current level to then be £10bn) in the next 3 years. They will need at least £75 m fresh external funding to buy enough other IFA businesses to get anywhere near that...

[ronwilkes123] 09/11/2019 13:03

Dex sorry to interject

In the last RNS they stated further acquisitions would come from
Cash flow. How can appetite diminish if they have already stated they do not need any funding. #confused

[eentweedrie] 09/11/2019 11:58

all will be revealed in the T/U...

[dexdringle] 09/11/2019 11:31

Share register here is still quite concentrated with the majority being significant insiders (CEO and chums), a handful of institutions and ordinary AFH staff and advisers including advisers who may have taken shares in exchange for selling their businesses to AFH. Is still quite illiquid.

The sales yesterday likely to be another of the institutions reducing. Not likely to be any sellunvbin advanced of poor figures.

It does all seem to be unravelling a bit though - the £10bn FUM target can't happen organically and appetite for more external monies to fund more acquisitions might be waining ??

[jrr1] 09/11/2019 10:13

a lot of selling prior to the trading update?

[cheshire man] 04/11/2019 11:47

Bought in here last week, all moving in the right direction here

[jrr1] 04/11/2019 11:46

trading update coming soon.
hopefully we will gain an insight to the revised growth strategy. organic growth figures will be important.

[rivaldo] 04/11/2019 08:35

Nice little in-fill acquisition this morning:



Liberum retain their Buy and 568p target price:

[eentweedrie] 17/10/2019 13:40

just bought in again. made 10% recently on this - great levels again to buy in imo

[ronwilkes123] 17/10/2019 12:44

He also points out they can't hit the 10 bil aum target without acquisitions so rightly the stock has been derated post the acquisition pause

[ronwilkes123] 17/10/2019 12:35

Good of him to provide justification to the continued derating here

[rivaldo] 17/10/2019 10:22

Edmond Jackson says Buy - a nice balanced article concluding that the investment rationale remains in place:

[jrr1] 15/10/2019 11:25

lets hope they put some meat on the bone with the trading update.
i was hoping the business update would have some sway, but think the turnover / profit figures are needed.

[quepassa] 15/10/2019 11:04

Significant shareholding changes since 9/8/19

I took a print-out of shareholdings on 12/9/19 and have compared them to currently listed shareholdings on the AFH web-site as at 27/9/19, about seven weeks later.

These are the big sales/reductions in shareholdings:-


Polar Capital have reduced from 7.10 to 3.83% ( minus 3.27%)
Merian Global have reduced from 5.60% to 4.99% ( minus 0.61% )



However, there are some big purchases/ increases as well

Lombard Odier have increased from 3.83% to 6.34% ( plus 2.51%)
Philip Mobberley has increased from 6.94% to 7.99% (plus 1.05% )


Perhaps most importantly, other key investors have been steadfast with their holdings such as:

CEO remained at 15.32%
Slater Investments remained at 9.99%.



The big seller between 9/8 and 27/9 has been Polar Capital but offset by other buyers with no management selling at all.

Not sure why Polar have been selling down - and perhaps they have continued to do so- but maybe this has had a negative impact on the share price in recent time.


Overall however, somewhat re-assured that most investors have been steadfast or significantly increasing like Lombard Odier.

ALL IMO. DYOR.
QP

[ronwilkes123] 07/10/2019 14:38

Liberum putting out positive analyst notes whilst it appears there's a large seller they are trying to get away #conflict

[bazzer1000] 04/10/2019 08:32

Thanks dex and nfs. Very well explained. Good to find some quality responses on ADVFN.

[rivaldo] 02/10/2019 13:49

For the record, here's a couple of extracts from Liberum's post-update note:

"AFH Financial Group*
Focus on organic growth should lead to a re-rating
BUY
Target price 568p | Published price 276p | *Corporate Broking Client of Liberum

AFH's business update provides clarity on their business strategy. The 3-5 year targets have been reaffirmed showing the firm’s continued growth ambitions, however, when the current pipeline of acquisitions is complete there will be an increased focus on generating organic growth and driving operational efficiencies within the business. We view this as a pragmatic decision that will allow time for free cashflow to be generated. This will in time provide the ability to fund future acquisitions and deliver progressive dividends to investors.

AFH now trades on a FY20 P/E of 7.8x, which, for a business with at least 8% net flows and focussing on cash conversion, offers significant value. A re-rating of the stock appears likely. Re-iterate
BUY."

"Financials and valuation

We continue to value AFH on 16.0x FY20 P/E which gives our TP of 568p. We believe the strong organic growth at AFH, its focus on operational delivery and a reduction of the perceived dilution risk will be viewed positively be shareholders. A significant re-rating appears likely as the current FY20 P/E of 7.8x is significantly below its historic average forward P/E of 13.0x and the 18.0x forward P/E it traded to in 2018. This appears particularly cheap when we have seen continued corporate activity in the wealth management space and interest in wealth managers from private equity. Our TP indicates 106% upside. BUY."

[quepassa] 02/10/2019 08:18

The FT today, commenting on yesterday's trading session:

" Hargreaves Lansdown led the FTSE 100 fallers after both Credit Suisse and Panmure advised selling."

...citing inter alia that the HL higher than average pricing model is not sustainable in the long-term...


Further supports the view that the high fee model of wealth managers such as HL and St James Place is busted.

This is excellent news for lower cost providers like AFHP whose astonishing inflows of AUM highlight the rapidly evolving market.

This sector backdrop bodes very well for burgeoning AFHP.

ALL IMO. DYOR.
QP