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Numis enjoys London market resurgence

The broker enjoyed a late surge in equity raisings and trading activity
December 6, 2017

Given that the fortunes of Numis Corporation (NUM) are inextricably linked to investor and corporate confidence in the London equity market, it is fair to say that both sets of clients ended the year with a more positive outlook. While an uncertain political environment weighed on IPO activity during the first half, the latter six months of the year more than made up for it. The broker completed seven IPOs for companies including Luceco (LUCE) and Premier Asset Management (PAM), five of which were executed in the second half. What’s more, management says its 2018 financial year has got off to a good start, with revenue for its equities business ahead of the same time the previous year.

IC TIP: Buy at 299p

Revenues at the corporate broking and advisory business were up 15 per cent year on year to a record high of £85m. It completed 101 transactions, raising £2.5bn in funds – up a third on the previous year. That included 38 secondary fundraisings for clients including John Menzies (MNZS) and Learning Technologies (LTG). The group is also attracting larger clients, with the average market capitalisation up more than a quarter to £726m.

The shift towards corporate advisory work – which provides a steadier income stream – also continued. Numis completed 37 pure advisory roles, advising on deals including the McColl’s (MCLS) acquisition of 298 stores from The Co-Operative and John Menzies' purchase of ASIG.

Within the equities business, combined trading and institutional revenue increased 17 per cent to £45m. That surpassed the record level set in 2014. Investor sentiment improved on the prior year, with trading revenues up more than a third. Together with rising prices and low levels of volatility, this provided rich pickings for the broker. Institutional commissions were up 12 per cent. That was despite competition from 'dark pools' and pressure on institutional investors’ payment models, as they prepare for the implementation of Mifid II in January.  

NUMIS CORPORATION (NUM)  
ORD PRICE:299pMARKET VALUE:£318m
TOUCH:294-299p12-MONTH HIGH:315pLOW: 228p
DIVIDEND YIELD:4.0%PE RATIO:11
NET ASSET VALUE:126pNET CASH:£96m
Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20137822.616.99
20149324.418.710.5
20159821.519.511.5
201611232.523.512
201713038.327.412
% change+16+18+17 
Ex-div:14 Dec   
Payment:9 Feb