Cenkos Securities Share Discussion Threads

[trident5] 21/9/2021 15:08

Stick to the knitting - I prefer that than diworsifying just because of MIFID2.

[speedsgh] 21/9/2021 09:38

‘Even the apprentice gets equity’: City broker Cenkos eyes growth under new CEO Morse -

New boss has overseen a period of expansion and a rebound in the company’s fortunes, with revenues surging by 37% to £18.2m for the half year in 2021, while profits are up by 40% to £2.8m

Nearly three years ago, City broker Cenkos Securities was facing pressure from activist investor Crystal Amber to merge with a rival as Europe’s tough new markets rules, MiFID II, had squeezed the sector.

Cenkos’s profits had tumbled 90% by mid-2018, prompting its chief executive, Anthony Hotson, to step down less than a year into the role. It rehired former boss, Jim Durkin, to steady the ship during a turbulent period. Crystal Amber’s investment adviser, Richard Bernstein, told Financial News in 2019 that Cenkos was “poorly managed” and was urging it to kick-start consolidation in what it believed was an increasingly crowded market for wobbling City brokers.

MiFID II, which requires banks and brokers to separate trading and research charges, battered revenues and ushered in gloomy prospects for City brokers. But while rivals including Numis and Berenberg responded to the regulation by expanding into new areas of investment banking, Cenkos has largely stuck to its broking roots.

Durkin stepped down for the second time in December, hanging up his hat on a 40-year broking career. Julian Morse, who led Cenkos’s growth companies team, was installed as his replacement.

“We’ve been staying very narrowly focused on what we’re good at,” said Morse on his key priorities since taking the top job. “The message has been doing what we’re good at better. We’ve concentrated on growing our market share.”

So far, he has overseen a period of expansion and a rebound in fortunes at Cenkos. Revenues surged by 37% to £18.2m for the half year in 2021, while profits are up by 40% to £2.8m. The firm has helped raise £1.1bn on equity markets so far in 2021 — more than all of last year and nearly double the £670m in 2019. Its shares are up by 50% so far this year.

Morse, however, does not think the sector’s problems are entirely behind it.

“There will be continued consolidation within our peer group and some firms will really struggle,” he said. “The top brokers are doing the vast majority of deals. Ten years ago, people would drop out, set up a new firm and start again. Now, the landscape has changed massively — brokers are capital light but the regulatory burden has increased. You can’t start with a blank sheet of paper, the barriers to entry are really high.”

Cenkos has been expanding, hiring 12 people so far this year, taking its headcount to about 100 people. This comes after a restructuring completed in the first half of 2020 that saw average headcount shrink by 20 people last year.

Staff costs have spiralled by 60% in the first half compared to 2020, to £11.8m. But this is not just down to recruitment. One of Morse’s first actions as chief executive was to expand its share incentive scheme from just a select few executives to the entire company. Employees are now paid both a cash bonus and equity, and have the option to buy more shares in the company.

The move has bolstered morale after a difficult period, but also has helped retain talent after a couple of years when rivals including Panmure Gordon swooped on some of Cenkos’s employees. “Everyone gets some equity. We have an apprentice here and even he has some options,” said Morse. “It is very important that everyone feels part of the team.”

While MiFID II sent shockwaves throughout the City stockbroking sector, the Covid-19 pandemic has provided a boost. Trading revenues have soared as equity markets became more volatile — Cenkos’s were up by 200% on last year — while listed firms have tapped capital markets for funding and the UK initial public offering market has revived this year.

So far in 2021, Cenkos has worked on IPOs for Lords Trading and GENinCode, and 21 equity fundraisings including a placing of $85.5m for the Round Hill Music Royalty Fund in July and $24m for 88Energy earlier this month.

After a difficult period for City brokers, there are signs that things are finally looking better for the sector. Both Numis and Berenberg have signalled continued expansion, while City broker Peel Hunt plans to list on the UK’s AIM market to drive its growth. It will establish a European presence and invest in technology, it said in a 14 September statement. Panmure Gordon, meanwhile, is returning to its broker roots under chief executive Rich Ricci, after a period broadening its investment banking offerings.

“There has always been stiff competition, and that is a good thing,” said Morse. “It keeps us on our toes.”

[quepassa] 15/9/2021 11:30

New CEO, Julian Morse, interviewing a week ago on 8th. September with Proactive Investors (USA) following Cenkos' strong interims.

Link herewith to seven minute ProActive video-interview:


hXXps://www.proactiveinvestors.co.uk/companies/news/959821/cenkos-securities-report--very-strong-results--as-revenue-underlying-profit-and-dividends-climb-959821.html



Half-way in, the CEO says the following:-


" ..WE DID 16 TRANSACTIONS IN THE FIRST HALF, BUT IN JULY AND AUGUST AND THE FIRST PART OF SEPTEMBER WE'VE COMPLETED ANOTHER 10 TRANSACTIONS WHICH IS TRADITIONALLY A QUIETER PART OF THE MARKET...HAS BEEN A GREAT START TO THE SECOND HALF INCLUDING TWO IPO'S..."


Also, some interesting comments about the share incentivisation schemes for staff.



A good interview by Cenkos' new CEO.


ALL IMO. DYOR.
QP

[quepassa] 14/9/2021 18:53

In relation to above post on the £175m equity-raising for Smart Metering Systems where Cenkos is both NOMAD and joint book-runner, it should be noted that there are some very significant fees being paid.

This is an extract from the Announcement:-

"4. Details of the Placing

The Group's total costs and expenses associated with the Placing are estimated to be £4.8 million."


A guesstimate on my behalf but potentially fees could be (significantly) in excess of £1.5million for Cenkos as NOMAD and joint books.

ALL IMO. DYOR.
QP

[carcosa] 13/9/2021 17:32

Cenkos Joint Bookrunner with Investec Bank & RBC Capital Markets for Smart Metering System £175m equity raise.

[quepassa] 13/9/2021 10:33

wow. if you don't understand that.......goodness gracious

[trident5] 13/9/2021 10:18

How does lowering the bid encourage sellers? If anyone six looking to sell at a lower price - please let me know.

[tole] 10/9/2021 08:39

Simon Thompson IC write up

[brucie5] 10/9/2021 08:32

Why such a belated jump? Results were yesterday...

[topvest] 09/9/2021 19:59

These results are better than I expected given H1 was not fantastic for them. If I were still a shareholder I would be encouraged by these results. Probably sold a tad early.

[brucie5] 09/9/2021 10:01

From Paul Scott on Stocko:



My opinion - the glory days of raking in huge fees from big IPOs bought by Woodford, are long gone. However, Cenkos is still profitable, has a lovely cash rich balance sheet, a fair bit of clout & strong brand name, and its market cap is only £45m, which doesn’t seem a lot.

It pays divis too, with a 1.25p interim divi declared. Quite interesting overall.

[quepassa] 09/9/2021 08:25

Strong figures.

Major Increase in Dividend by 25%. That's massive.

Assuming that final dividend is equally increased, Cenkos now trading on a PROSPECTIVE YIELD of some 5.5%.

A very attractive yield from a firm which has a very long and reliable record of paying dividends and which reiterates that it intends to "return significant value to shareholders while seeking to establish a level of consistency of dividend payments throughout variable market conditions."

By comparison Numis pays a dividend of circa 3.55%.

Buoyant outlook.


ALL IMO. DYOR.
QP

[brucie5] 09/9/2021 08:06

Good results. 25% rise in interim dividend.

[speedsgh] 31/8/2021 07:42

Cenkos are acting as bookrunner on the UK portion of a AUD20m (£10.6m) placing for 88 Energy Ltd (88E). EurozHartleys Ltd are acting as bookrunner on the Australian portion...

[speedsgh] 20/8/2021 12:01

Confirmation of successful placing/subscription for MPL which raised £9.6m. Cenkos acted as joint bookrunner alongside Zeus Capital.

There are some investors/commentators who believe that MPL is a fraudulent company. I have no idea as to the veracity of these allegations but would have thought that Cenkos would be better placed distancing themselves from clients that seem to be perpetually shrouded in a cloud of suspicion. One would hope that they have learnt from their Quindell experience?

[tanneg] 19/8/2021 17:08

Cenkos Securities plc is acting as lead manager in relation to the Placing for Mercantile Ports & Logistics,


"The Company is conducting a conditional Placing and Subscription to raise a minimum of £9.5 million via the placing of the Placing Shares and Subscription Shares at the Issue Price."

[tanneg] 13/8/2021 07:21

And another £6.2 million placing for Brave Bison this morning

[tanneg] 12/8/2021 17:46

Placing to raise a minimum of £30 million & Open Offer to raise up to approximately £5 million for Creo Medical Group,

[tanneg] 03/8/2021 17:39

Tiny placing for Cap-xx



and news last week as sole broker to Fulcrum Utility Services, Cenkos already nomad,

[speedsgh] 03/8/2021 07:40

Loss of mandate. Cenkos replaced as Nomad/sole broker to The Property Franchise Group (TPFG) by Canaccord Genuity.

[mattboxy] 21/7/2021 16:22

Quepassa see post3873

[carcosa] 21/7/2021 08:37

Couple of overview graphs showing transaction progress since start 2020. Data taken from CNKS website plus a bit for this month yet to be confirmed on their website