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A dramatic increase in trading volumes in the first two months of the second half tended to overshadow the first set of interim results from Tullett Prebon since it demerged from Collins Stewart last December to become the world's second largest inter-dealer broker (IDB) after rival Icap. While the first half saw profits at the operating level up 8 per cent at £64.8m, revenue in July and August was running 30 per cent higher than a year earlier.
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The group acts as an intermediary between banks dealing in derivatives and other securities without actually taking a position itself, and is profiting from the very high levels of volatility brought about by the current turmoil in credit markets.
The group's US operation is especially well-placed to benefit from the current market volatility following the acquisition earlier this year of New York brokerage firm Chapdelaine. It is also busy recruiting more brokers, and the benefits of this expansion are expected to start showing through later this year, by which time the new staff are expected to generate annualised income of £60m for an investment outlay of less than £20m.
UBS expects net income of £60m for the full year and EPS of 28p, rising to £70.7m and 33p, respectively, in 2008.
Click here for a guide to the terms used in IC results tables
| TULLETT PREBON(TLPR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 410p | MARKET VALUE: | £871m | |
| TOUCH: | 410-411p | 12-MONTH HIGH: | 520p | LOW: 360p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 53p* | NET DEBT: | 181% | |
| Half-year to 30 Jun |
Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 348 | 68.1 | 16.9 | 5.0 |
| 2007 | 372 | 57.1 | 17.2 | 4.0 |
| % change | +7 | -16 | +2 | -20 |
Ex-div: 14 Nov Payment: 6 Dec *Includes intangible assets of £359m, or 169p a share |
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Volatile credit markets are ideal for an IDB like Tullett Prebon. So, trading on only 12.5 times 2008 earnings estimates - a 23 per cent discount to rival Icap - the shares remain good value.
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
