Join our community of smart investors

MAB warns on subdued housing transactions

The mortgage broking specialist expects Brexit-related uncertainty to impact on adviser growth levels this year
March 19, 2019

Given anaemic UK housing transaction volumes – which dipped 2.5 per cent last year – estate agents are understandably feeling the pressure. Mortgage Advice Bureau (MAB1) expects ongoing Brexit-related uncertainty to result in “muted” trading for its estate agency-based adviser representatives in 2019 and result in flat revenue for each of those advisers. Adviser representatives pausing expansion plans and delaying filling vacancies is also expected to impact “marginally” on the mortgage brokerage’s adviser growth rate this year, before a return to normal levels in 2020.

IC TIP: Hold at 546p

Boosting adviser numbers is one of the main ways the group grows its market share. Last year it increased the average number of representatives by 12 per cent to 1,213, rising to 1,234 by mid-March. That helped grow its market share of new lending to 4.7 per cent, from 4.3 per cent last year. New mortgage lending arrangements were up 14 per cent, while product transfers –where lenders switch providers – grew more than three-quarters to £1.3bn. However, the jump in product transfers and a drop in protection sales – due to lower house purchase mortgages – meant the gross profit margin dipped to 23.1 per cent, from 23.8 per cent.    

Analysts at Numis expect adjusted pre-tax profits of £17.8m and EPS of 29p, up from £15.7m and 25.9p this year, respectively, in 2018.

MORTGAGE ADVICE BUREAU (MAB1)  
ORD PRICE:546pMARKET VALUE:£279m
TOUCH:544-568p12-MONTH HIGH:740pLOW: 470p
DIVIDEND YIELD:4.3%PE RATIO:21
NET ASSET VALUE:40p*NET CASH:£26m
Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201456.66.99.62
201575.510.417.214.4
201692.815.225.618.3*
201710914.523.821.4
201812315.725.923.3
% change+13+8+9+9
Ex-div:25 Apr   
Payment:24 May   
     

*Includes intangible assets of £4.8m, or 9p a share

**Excludes special dividend of 5.35p a share