First-half profits tumbled at pawnbroker Albemarle & Bond as a boom in its gold buying business went into decline. Put simply, Albemarle's customers are running out of gold to sell, meaning the business only contributed 27 per cent of first-half gross profit compared with a third at the same stage last year. The decline is expected to continue.
However, past bumper gold-buying profits were invested in new stores. So two-fifths of Albemarle's stores are less than three years old and offer significant potential as they only account for a sixth of the loan book. So while first-half pawnbroking profits only edged ahead 2 per cent to £17.6m, accounting for just over half the total, management hopes to exploit the potential of the new stores, despite the current competitive environment, by offering increased lending options.
It is also hoped the purchase and integration of an online payday loan business will reinvigorate Albemarle's unsecured lending operation, which has been blighted by the demise of the cheque guarantee card. Tighter regulation is also expected to help.
Broker Canaccord forecasts a fall in full-year pre-tax profits from £21.4m to £16.5m to produce EPS of 22.2p (from 28.5p in 2012), before a rebound to £18.5m and 25.1p, respectively, in 2013-14.
| Albemarle & Bond (ABM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 205p | MARKET VALUE: | £114m | |
| TOUCH: | 204-210p | 12-MONTH HIGH: | 375p | LOW: 192p |
| DIVIDEND YIELD: | 6.2% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 146p* | NET DEBT: | 62% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 62.7 | 12.1 | 16.3 | 3.00 |
| 2012 | 58.9 | 8.1 | 11.2 | 3.00 |
| % change | -6.1 | -33 | -31 | - |
Ex-div:13 Apr Payment:20 May *Includes intangible items of £29.8m, or 54p a share | ||||
