At the start of its financial year, Numis (NUM) suggested an encouraging pipeline of private deals might offer some relief from anaemic activity for listed clients. Although this positive momentum continued in the three months to December, those hopes have since been dashed as unlisted deal-making has mirrored the stasis seen on public markets.
Revenues in the core investment banking arm consequently dipped 5 per cent to £36.9m in the half-year to March. Don’t write off advisory and capital markets work entirely, though. In the final weeks of the period, and in subsequent weeks, Numis has seen an uptick in equity placings and emergency fundraising activity, as clients respond to the acute liquidity stress created by Covid-19.
The Aim-traded company expects this trend to continue, although co-chief executive officers Alex Ham and Ross Mitchinson cautioned that the frequency of these types of deals will likely determine near-term performance. Expect M&A and listing work for Numis’s 209-strong corporate client base to remain depressed.
Fortunately, the same market volatility that hit deal-making has been a boon for trading desks, with equities revenue up more than half to £26.2m. However, the impact was not reflected in the bottom line, as higher staff costs and share-based payments pushed up the group-wide compensation ratio from 54.2 to 58.6 per cent.
Consensus forecasts are for earnings per share of 13.9p for the year to September 2020.
| NUMIS (NUM) | ||||
| ORD PRICE: | 286p | MARKET VALUE: | £303m | |
| TOUCH: | 283-286p | 12-MONTH HIGH: | 317p | LOW: 165p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 129p | NET CASH: | £89.7m* | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 55.7 | 7.1 | 5.4 | 5.5 |
| 2020 | 63.1 | 7.3 | 6.0 | 5.5 |
| % change | +13 | +2 | +11 | - |
| Ex-div: | 21 May | |||
| Payment: | 19 Jun | |||
| *Includes lease liabilities of £5.7m | ||||
