Keystone Law Share Discussion Threads

[maddox] 21/1/2021 17:34

We had a inkling that legal services were experiencing strong demand back in October when RBGP reported 'Rosenblatt Limited ("RBL") has continued to trade well with case value and volumes remaining significantly ahead year-on-year.' KEYS in November were a bit more measured 'performed well throughout the second half to date' despite Covid-19, and 'now expects to deliver profits for the year comfortably ahead of current market expectations' This has now become the far more positive 'expects to report adjusted profit before tax for the period which will be materially ahead of current market expectations' Always think it useful to understand how the results/updates narrative is pitched and how well performance correlates across the different firms and markets. Does anyone have good insight into the drivers of this demand? Is WFH generating a lot of divorce cases for example?

[alphabeta4] 21/1/2021 08:40

Very impressive update, taking the usual 'materially ahead' to mean at least 10% then pbt forecast at least £5.61m. Would imply H2 pbt of at least £3.4m. Cash at interims was £6.9m, £1m dividend paid since, £3.4m x say 80% is £2.72m. £4.4m cash on finals so now have c£4.22m extra cash vs then or c14p a share. Last year pbt £5.8m so forecast now circa 3% under. Share price back then £6.20, implies (£6.20*0.97)+14p for £6.16 minimum target. Seeing as consensus forecast forward pbt was £6.41m back then and they have just done £3.4m H2 would imply there's a case prospects are more solid vs back then (presumably from underlying business growth from fact they've still been adding partners in the recession). If so then could be further upside on the £6.14. A cautious £6.8m pbt forecast (£3.4m*2) would add another 6% to this target (6.8/6.4) for a target price of £6.52. All IMHO of course but enough for me to have added this morning, looks a quick 20% available and potential for positive surprises.

[tkamp] 09/1/2021 10:43

Keystone reported 10 new partners joining them in January, which is a great figure, especially on the back of many other sign-ups in H2 2020. I suspect 2021 will be a very strong year for Keystone.

[energeticbacker] 14/9/2020 14:38

Keystone’s platform business model has demonstrated terrific growth over recent years and we are impressed they still managed to attract a significant number of new lawyers during such a challenging period. The shares trade on a mighty valuation (PER 2021: 31x) compared to other more traditionally structured AIM listed law firms but its platform model has evident appeal and could be increasingly attractive to lawyers in the remote working environment. More on the Investor's Champion website.

[tkamp] 14/9/2020 11:28

Good set of results from KEY. Still managing to grow revenues when the economy (world) came to an almost complete step is impressive. Hopefully they can soon return to >15% growth rates

[tkamp] 29/8/2020 07:43

I doubt that's true. You're a day trader, I think you barely know what Keystone does.

[halfpenny] 28/8/2020 10:46

KEYS have a number of Partner/Virtual Lawyers who do the work for those who Outsource their legal work. Since Covid the demand has increased tenfold so results next month will be great news.

[tradertrev] 26/8/2020 22:18

This firm's clients are mostly SMEs - they don't have in-house legal teams/departments. It's not an outsourcing play. Good business nonetheless.

[halfpenny] 26/8/2020 11:50

Boozy, you are correct and now is the time to get in as the spread is very close... 600 my target

[halfpenny] 26/8/2020 11:45

KEYS, they are now looking good value and with economy moving does put them in a strong outsourcing position. Companies are now looking closely at their bottom line and in house legal teams are expensive so Outsourcing is the next phase to improve productivity. See £6 plus as we get closer to Results in September.

[boozey] 25/8/2020 16:32

Maddox, I agree. The business model of KEYS - like DWF (which I know about) and INCE (which I know very little about), has a business model that is tailor-made for tough times as companies outsource non core business activities (legal in this case) rather than carrying heavy specialist costs in-house. Seeking out sectors and companies that can prosper in the current climate is key to having a progressive portfolio right now. IT Outsourcing, online retail, Computer Games to name but a few. And Energy is a good defensive sector even if it will never set the world alight. Specifically on Keystone, with a spread of 20p+ at times it is almost impossible to short it without taking a massive risk. As it is an illiquid stock one has to be prepared to stomach the swings up and down as long as over time it goes more up than down!

[maddox] 25/8/2020 11:41

halfpenny - you are a day trader with a short on, talking down the price - you haven't a clue. You've been shorting INCE and looking for another share in same space. Do you really think we're stupid and your one-liners will influence the sp? Looking forward to your insights and analysis on KEYS.

[halfpenny] 25/8/2020 09:57

Target 600 and NOW is a time to get back in...

[halfpenny] 25/8/2020 09:56

KEYS are now LESS Risky i got out at THIS LOW and now expect further growth as profits increase and Risks decrease looks good and this is a LOW price

[wingrove4] 12/8/2020 14:35

Bought some more today, been a very profitable share for me as you say thinly traded, but noticed the spread is better than previously.

[tkamp] 12/8/2020 08:27

The fact that shares are flat despite this news is pretty surprising, though it just goes to show how incredibly little trading takes place in this stock. One thing from the news announcement that jumped out to me was the comment that 55-70% of lawyers's earnings in the UAE subsidiary will be paid out to lawyers. I believe that in the UK this share is 75%. That means that Keystone would see margin accretion long term in case the UAE operations are a success

[tkamp] 11/8/2020 17:54

Keystone just announced its opening a subsidiary in the UAE. Definitely positive for the growth story.

[halfpenny] 05/6/2020 10:15

KEYS looks like a silent winner with huge potential and looking very cheap. Lots of potential as economy Activity improves. My secret fund. How can you imagine a world without a solicitor? There will only be more work load as deals and conflicts will always continue.

[eca04bpm1] 10/5/2020 09:19

https://www.keystonelaw.com/news/keystone-law-appoints-eight-new-lawyers-to-the-firm8 new lawyers hired since COVID lockdown. KEYS strength and revenue driven buy ability to continue hiring.

[maddox] 02/5/2020 13:43

Thanks Tkamp, this is the attractive investment case that I'm buying into - it's not, as I see it, dependent upon Covid-19 or an increase in insolvency litigation. But, as I say, happy to hear a alternative argument.

[tkamp] 01/5/2020 14:42

Drivers are increasing # of partners joining Keystone (due to higher earning potential as they get a direct cut of their fees earned) as well as a higher average fee earned per partner (driven by general growth in law industry as well as perfect incentives from that direct cut, and lastly from partners at Keystone referring work to other Keystone partners). Keystone will continue to outgrow the industry for many years to come as they take more market share

[maddox] 01/5/2020 09:06

tkamp, I agree, investorschampion opinions - this and others aren't persuading me to subscribe for their analysis. Whilst these legal market firms should do well from the expected increase in litigation as a result of Covid, KEYS as a platform business model, has different drivers. KEYS is a service designed for remote working - perfect for the Covid Lockdown - but I'm not sure I see a direct revenue driver for KEYS? Happy to be challenged on this?

[tkamp] 28/4/2020 15:11

"underlying growth drivers are the same as other law firms" That statement is total nonsense. Keystone Law is aggressively taking market share in the industry, while the aggregate of 'other law firms' are obviously not. That is what allows Keystone to outperform the law industry across the cycle. I used to own Keystone a few years ago and then sold out when the shares reached 500p (which was a forward PE of ~40x at the time). I recently bought back in at 420p and like the shares at this level. Keystone will probably manage to continue to grow revenues and earnings at 10-15% levels for 5-10 years to come (admittedly, 2020 may be an exception). With a capital-light business model, a strong (net-cash) balance sheet, and rock-bottom interest rates Keystone shares trading below 30x PE are actually pretty attractively valued.

[alphabeta4] 26/3/2020 08:49

Thanks for the 'heads up'. I have previously held Mano and was surprised to see it sold off with everything else. Unfortunately time has meant I haven't got that far yet but it is on my list. BEG performance seems a bit odd too.