Mercia Asset Management Share Discussion Threads

[weatherman] 18/10/2023 08:13

Another direct investment into Netacea, of which they hold over 30 percent - this develops AI security - another Co DARK is valued at several billion with strong growth in the sector.

[riverman77] 21/9/2023 09:35

Virtually no detail and not the first time they've put out such a vague statement. You'd think they'd want to add a bit of detail to try and put some life into the share price.

[cerrito] 21/9/2023 09:23

I thought it a bit wishy washy but to be fair it is in the same format as the AGM statements of the last two years.
Good for them for having investee companies at the AGM and too bad I did
not organize myself to get there. Any feedback welcomed.

[weatherman] 21/9/2023 08:46

Positive AGM statement I thought.

[weatherman] 01/9/2023 11:34

Some of their managed funds held the stock in the past - don't know about the present.

[weatherman] 14/8/2023 22:03

FIL took 5%.

[robsy2] 13/7/2023 11:06

I have added a few more this morning. I blow hot and cold with MERC but still see it as a broadly bullish story especially at this low level.
What do we know?
MERC is profitable , pays a 3.3% dividend and has a lot of irons in the fire. The share price has been lousy but the business is performing pretty well . The hybrid model of Balance Sheet investment, cherry picking opportunities,combined with the blended returns of 2% on the 1.2b of AUM looks compelling.
They are delivering and see a lot of opportunity to deliver more.
They have added extra funds and capacity at good prices.They seem to be good at what they do, the VCT's perform well and continue to gather more and more capital. The network of regional offices and 140 staff means they are good at deal origination.
They see the business as being quite scaleable which is good news . The British Business Bank (BBB) is a useful partner, in fact MERC manages around 25% of all the money they invest and they are adding more.
One thing I asked them at the last presentation meeting was about how they feel they might benefit from some of the potential changes designed to get more investment money flowing towards small caps , venture capital etc especially from pension funds, the so called Mansion House reforms- they didn't really address the question, however these reforms are in the making and coming soon. My feeling is that MERC might be well placed to get their hands on more of the fund flows into Venture capital and in time this could be quite significant.Pension funds don't have any expertise in this area of investment and MERC do, so why not award them some mandates?

[p1nkfish] 04/7/2023 17:11

Balance sheet at nav seems unlikely ???
Why will they achieve nav on the bs vs others at discount?

[cordwainer] 04/7/2023 17:07

Abstract from today's Singer Capital Markets note:

FY23 adj. EBITDA was materially better (£7.6m vs SCMe £4.9m) on higher initial fees and interest income. Core management fee income was in line. Underlying growth in investee companies indicative of value creation offset multiple contraction. £1.4bn AuM is tracking toward the £1.6bn FY24e “20:20 vision” target, although we see scope for outperformance with plentiful organic opportunity. We increase our forecasts from higher initial fees and interest income. We reiterate our BUY noting value across all metrics. Our 66p 12m TP is DCF-derived but equates to the balance sheet at NAV plus asset management earnings at 14x EBITDA

[robsy2] 04/7/2023 16:50

Yes, i also have my doubts. I’m gonna give them another 12 months to make me some money as well as themselves.

[p1nkfish] 04/7/2023 16:33

The past still casts a shadow - posts 926, 1048 for those with a short memory + others.

Hold but no moonshot.

[p1nkfish] 04/7/2023 16:31

Goldmans made money out of Sense Bio sale, MERC sounds like they were rogered?

Sheep vs wolves?

[columbarius] 04/7/2023 14:52

Thanks, like this bit “The group has set an "ambitious" target of increasing total capital deployment to a record level of £250m in FY24, utilising strong unrestricted liquidity of c. £378m across the group and noting the improvement in "both the quality and volume of investment opportunities".

Good time to invest for growth I think. Conviction buy with 61p TP.

[davebowler] 04/7/2023 09:42

Justin Bates | Analyst | Canaccord Genuity Ltd (UK) | [e-mail] | 44.20.7523.8380 Portia Patel, CFA | Analyst | Canaccord Genuity Ltd (UK) | [e-mail] | 44.20.7523.8386 Strong FY23 results Canaccord Genuity view Adj. operating profit of £7.6m, 39% ahead of our forecast Mercia has delivered excellent results against a challenging market backdrop. Key highlights from FY23 (31 March y/e) were: •Third-party FUM of £1,234m, including £415m of acquired FUM (Frontier Development Capital, which is said to be performing in line with expectations) and was net of £38m of distributions to investors as a result of investment realisations. •Organic FUM inflows were £134m, +18% of opening FUM with no redemptions, which is impressive in challenging markets. •Direct investment portfolio FV at 31 March was £136.6m, reflecting £20.7m of gross investments into 13 portfolio companies, £4.0m of realisations (Intechnica) and £1.2m net FV gains. •Total AUM was £1,437m, +50% y/y and on track to achieve the current three-year target of £1.6bn in AUM by the end of March 2024. •Total revenue excluding performance fees was £25.9m, +9% vs our forecast and +26% y/y. The beat to our forecast was driven by higher fund management fees. There were nil performance fees during the year (FY22: £2.6m gross), such that total revenue was also £25.9m, +12% y/y. •Adj. operating profit was £7.6m -10% y/y but +39% ahead of our forecast. •Adj. PBT (includes net performance fees, net realised gains, net finance income but excludes non-cash gains/losses) was £3.9m, +2% versus our forecast and versus £18.0m in FY22. There was a £1.8m realised gain on the disposal of Intechnica during the year (FY22: £9.9m in respect of Faradion). •Unrestricted cash and short-term liquidity investments were £37.8m at period end. •Total div: 0.86p (FY22: 0.80p), +7.5% y/y, reflective of the strong cash position and management's confident outlook. •NAV p/s was 45.4p, flat y/y. Outlook positive The group has set an "ambitious" target of increasing total capital deployment to a record level of £250m in FY24, utilising strong unrestricted liquidity of c. £378m across the group and noting the improvement in "both the quality and volume of investment opportunities". Changes to forecasts We increase FY24 revenue by 5% to £29.8m. However, due to inflationary pressures (wage & other admin expenses), this is offset to some extent by increasing finance income; the reduction to our adj. op. profit forecast to £6.5m is 9%. Our forecast for NAV per share remains unchanged at 46p. Valuation and recommendation Our target price methodology remains unchanged, i.e. we take the average of two scenarios. Firstly, a P/NAV of 1x, plus a value of 4% of FUM. The second scenario takes a value of 1x for NAV and applies a 20x PE to fund management profits. We roll forward the reference date for fund management PAT to CY24, from CY23. This results in our new target price of 61p (old: 62p), implying 143% upside. With such a discounted valuation, coupled with a positive outlook, GHE remains a conviction BUY for us

[waterfall city] 04/7/2023 09:17

I would like to see the specialist fund management business built up, Gresham house has been very successful with this strategy.

[stevenlondon3] 04/7/2023 07:48

The reported NAV is marginally lower (0.2p) despite the rise in interest rates affecting the discount rate. Presumably the fund management business has increased in value as well. Patient holder.

[waterfall city] 03/7/2023 14:52

A lot of big discounts in this sector, but unlike some of the others cash is healthy helped by the fund management business so not the same dilutive share raises like Tek etc have announced. Just needs Nav to grow faster to unlock the value here as the portfolio is maturing.

[weatherman] 07/6/2023 19:12

Warwick Ac is on the books at about £9.6m for 40%, so total value of about £23m. With some significant orders that will grow.

[robsy2] 07/6/2023 09:10

Good news and looking at the RNS , a reminder of the need for patience-the time scales are long. They could have reached a tipping point.
We've had a steady flow of good new of late, who knows maybe MERC is also t some sort of tipping point?

[cerrito] 02/5/2023 14:10

I see Singers reiterate 66p tp.

[cerrito] 02/5/2023 14:09

Thanks for reminding me about FDC, weatherman.

[weatherman] 02/5/2023 08:12

They report unrestricted cash £37.8m, compared to £56m last Sept - they paid £14m for FDC - £8m yet to be paid - that leaves about £4m to account for, which may have gone to working capital for the larger business, portfolio companies, or dividends. The £80m inflow is restricted to the funds, but will lead to higher revenue in the long run.

[cerrito] 02/5/2023 07:49

Looking forward to seeing the cash flow statements for the semester to 30.3.23.
I see in the six months to March cash decreased £19m even though they had the funds inflows announced today (granted some of them would have come in during April) and net investments have been running at £5m per semester.
Those who have bought in the last few trading days will not regret their purchase.