Mortgage Advice Bureau (... Share Discussion Threads

[bamboo2] 20/5/2015 15:33

Hi hazl, Using it to build chart experience and confidence.

[hazl] 20/5/2015 14:35

Microscope pity we haven't a telescope to look into the future!
Bamboo are you in or just lurking out of interest?

[microscope] 20/5/2015 14:22

Looks an interesting stock, but still having my first perusal. get the impression the valuation is about fair, but growth potential clear and maybe a decent niche. Added to watchlist.

[gargleblaster] 20/5/2015 14:20

Only a small share purchase by the FD, but of relevance since it is her first. Good to see that the number of advisers has increased (to 702), which is a good proxy for business growth imv.

[hazl] 20/5/2015 13:58

And more director buys it seems 8-)

EDIT


Thanks bamboo

[bamboo2] 20/5/2015 11:30

Hi hazl, I looked at the chart again. It has today reached 75% of triangle length, the average b/o point for symm triangles. The av b/o on pennants is at 85% of pennant length.

[hazl] 20/5/2015 10:54

Attracting some reasonable trades today I notice....

IMO

[hazl] 20/5/2015 07:18

'Adviser numbers have continued to grow since our final results statement on 26 March 2015 and had increased to 702 advisers as at 15 May 2015. '

as stated in the rns today

[hazl] 17/5/2015 09:45

thanks bamboo appreciated

[bamboo2] 16/5/2015 16:44

Hi hazl, the 75% point is simply 75% of the total length of the symmetrical triangle, ie 3/4 of the way along. Bulkowski has tested hundreds of charts to ascertain these stats. I should have removed the 75% line from the pennant chart because it is not relevant.

When I am looking at creating targets before the up or down b/o has occured, I use this point as a guide until the actual b/o occurs. This way i can make a judgement about the potential return on a trade.

[bamboo2] 16/5/2015 11:33

Had a look at chart, that at first glance looks to be a pennant forming on a flagpole, but looking at the duration, think it now qualifies as a symmetrical triangle. On average these b/o around 75% of their length, so a b/o could be imminent. One should wait for confirmation of b/o direction, which means an eod close above or below the trendlines. gla



If I'm wrong, and it is still a pennant, the alternative target is shown here,

[masurenguy] 16/5/2015 09:55

Link to the MAB investor section of the website which would have been useful to have in the header.
The 3 senior execs, Brodnicki, Preece and Robinson collectively still hold 46.1% of the shares.

[hazl] 30/4/2015 09:32

What a good little firm this seems to be!

IMO

[hazl] 23/4/2015 10:36

not surprising after a strong run....get rid of weak holders


IMO

[hazl] 22/4/2015 09:33

pays a dividend as well

[hazl] 17/4/2015 15:51

good close

[hazl] 17/4/2015 10:39

excellent progress ....visibility is better

imo

[hazl] 16/4/2015 11:44

Not insubstantial trades

imo

[hazl] 16/4/2015 07:17

thanks gargleblaster!!

[gargleblaster] 15/4/2015 22:13

Just bought in today on the back of this write up in shrs mag - wish I had been quicker off the mark!


Fast cash at Mortgage Advice

Maiden results give glimpse of MAB’s quality

Frothiness in the initial public offering (IPO) market means investors need to be especially careful when looking at recently floated stocks.

Cash shells are coming on to the market and surging to fantasy valuations, as covered in Agenda – Gate Ventures.

Flying distinctly under the radar is Mortgage Advice Bureau (MAB1:AIM), listed in November. Profitable, fantastically cash generative and delivering returns on capital which are off the charts, investors can still buy the shares at little more than 10% above what institutions paid to access an over-subscribed IPO.

Before getting on to the numbers we should look at what the business actually does.

MGEADVICE BURU(HDG) (WI) - Comparison Line Chart (Rebased to first)

OUTSOURCING BUREAU

Mortgage Advice Bureau (MAB) is the brand used by the majority of the independent mortgage brokers, known as Appointed Representatives (ARs), that use its bureau services.

Derby-based MAB provides a route to market for these brokers through its relationships with lenders, its brand and a range of outsourced services, most notably regulatory compliance and its proprietary IT platform MIDAS.

Outsourcing these activities enables ARs to focus on meeting new clients and winning business.

Insurance commission is also a key revenue earner at MAB contributing 41% of revenues compared to 42% in the mortgage division. These are mostly cross-sells to mortgage clients, according to analyst Robin Savage at house broker Canaccord Genuity.

PROFITABLE

Profitability is only a twinkle in the eye of many entrepreneurs bringing their businesses to AIM. Mortgage Advice Bureau co-founder and chief executive Peter Brodnicki tells Shares the business he majority owns grew pre-tax profit 40% a year in the five years prior to listing.

Results just out (26 Mar) show MAB continues to expand at the same pace. Year-ahead earnings per share are forecast by Savage at 14.3p, from 12.7p this year – a growth rate of 12.6%.
Growth: MEDIUM

Market share continues to grow in a mortgage market still well below its 2007 peak.
Risk: HIGH

Regulatory changes, customer concentration and retention of key personnel are considerations.
Quality: MEDIUM

Excellent cash conversion and returns on capital are offset by a short public trading record.

CASH GENERATIVE

Small businesses can suffer working capital strains as they grow, hindering their ability to reinvest. Brodnicki says the opposite is true at Mortgage Advice Bureau. It collects commissions from lenders and takes its cut before handing over the funds to brokers using its platform, meaning it has a negative working capital requirement.

Capital intensity is also low in the business, meaning return on average equity last year came in at 59%. These factors explain MAB’s target dividend pay-out ratio of 60% of earnings, which puts it on a forecast yield of 4.8% (8.3p a share, broker estimate).

Risks at MAB centre around regulation, and a number are highlighted in its prospectus. Commission – a key part of MAB’s earnings – has come under fire from UK legislators over the past five years.

Mortgage regulation, through the Mortgage Market Review (MMR) and the forthcoming European Mortgage Credit Directive (EMCD) are also in the offing. CEO Brodnicki says
early outcomes from the MMR indicate the new rules will help rather than hinder the intermediary market.

Buy-to-let lending may also suffer when the EMCD is fully introduced, according to Savage, because of tougher rules on individual buyers – potentially reducing volume growth.
MORTGAGE ADVICE BUREAU (MAB1:AIM) 181p

Stop loss: 145p

Market value: £91 million

Prospective PE Dec 2015: 12.5

Prospective PE Dec 2016: 10.1

Prospective dividend yield: 4.8%

Bid/offer spread: 2.6%

Analyst price target: 227p* *House broker Cannaccord, 26 Mar