Noble Investments, an international dealer in rare coins and stamps, enjoyed a new-year fillip with news of the sale of the Prospero Collection of ancient Greek coins at auction in New York for $25m (£16m), against industry expectations of something like $15m. In total, Noble oversaw sales worth $31m during the New York sale, which means its profits for 2011-12 are likely to beat expectations.
- Strong recent auction performance
- Profits set to beat forecasts
- Serves resilient markets
- High margins in auction business
- Acquisition risk
- Consumer slowdown could hit retail side
This impressive result boosted Noble's share price and confirmed the enduring appeal of alternative investments, despite economic gloom. Noble is well placed to continue benefiting from global demand for rare and collectable antiquities. It operates under two long established brands – Baldwins, a numismatic specialist established in 1872, and stamp specialist Apex Philatelics. Both offer retail operations and Noble also runs increasingly successful auctions through AH Baldwin & Sons in London, New York and Hong Kong.
Results for 2010-11 illustrate the resilience of Noble's business. Profits and dividends have now grown in each of the past six years and, according to broker WH Ireland's forecasts, this record is set to be maintained this year and next (see table).
NOBLE INVESTMENTS (UK) (NBL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 187p | MARKET VALUE: | £29.1m | |
| TOUCH: | 184-187p | 12-MONTH HIGH: | 187p | LOW: 124p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 96p | NET CASH: | £1.46m | |
| Year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 12.1 | 2.0 | 9.6 | 3.0 |
| 2010 | 14.1 | 2.2 | 10.1 | 3.5 |
| 2011 | 12.7 | 3.0 | 15.3 | 4.3 |
| 2012* | 13.2 | 3.3 | 17.2 | 4.7 |
| 2013* | 13.8 | 3.5 | 18.1 | 5.0 |
| % change | +5 | +6 | +5 | +6 |
Normal market size: 700 Market makers: 5 Beta: 0.0 *WH Ireland estimates | ||||
There is good reason for this optimism. True, the retail side is likely to remain subdued due to weak economic conditions, but the auction business looks likely to compensate fully. In 2010-11, the auctions side increased its revenues by 71 per cent and generated a profit margin of 52 per cent, around double the margins produced by the retail side, which explains the increase in profits despite the dip in revenues.
And with the final results, the company reported its largest order book of consignments for future auctions. The Baldwin's name, and the ability to offer auctions in London, New York and Hong Kong – as well as an online bidding service – gives the company an advantage when competing for auction rights. Following the success of the New York sale, Noble announced that Baldwin has been selected for two significant auctions of British and Islamic coins, starting in April.
Management has also invested in Noble's Apex Philatelics business and hopes that recruiting Colin Avery and Olivia Odell from rival Stanley Gibbons will help build up the business. With technology playing an increasingly important role in the global trade of collectables, Noble continues to invest in its website offering. It has a database of 45,000 customers, but estimates that there are 30m stamp collectors and 10m coin collectors worldwide, giving significant scope for growth. Acquisitions are also under consideration which, although adding some potential risk for investors, could lead to further growth opportunities and the company has cash in the bank to make strategic moves.
