The market gave Equiniti (EQN) a vote of confidence, following the release of full-year numbers that featured a 6.6 per cent rise in underlying cash profits to £98.5m. Trading was brisk, with the administration services group beating consensus revenue forecasts, although an increase in administrative costs, partly linked to the marquee deal to acquire Wells Fargo Shareowner Services, pushed statutory earnings down in the period.
The acquisition was completed in early February 2018 and has been described by analysts at Liberum as “transformative”. An overworked phrase, true, but the deal has certainly opened up the lucrative US market, facilitating further commercial relationships with major American companies such as JPMorgan. The potential for growth is clear, according to chief executive Guy Wakeley, when you consider that the group has around 50 per cent market penetration in the UK, but only 15 per cent of the much larger US shareholder services market. The costs of integration are substantive, however, and management does not expect the acquired business to begin contributing to earnings growth until 2019.
Analysts at Peel Hunt expect pre-tax profit of £78.3m, giving EPS of 17.5p in 2018 (from £62.8m and 16.9p in 2017).
| EQUINITI (EQN) | ||||
| ORD PRICE: | 289p | MARKET VALUE: | £1.05bn | |
| TOUCH: | 288-289p | 12-MONTH HIGH: | 319p | LOW: 173p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 80 | |
| NET ASSET VALUE: | 135p* | NET DEBT: | 48% | |
| Year to 31 Dec | Turnover (£m | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013** | 275 | -56.4 | na | na |
| 2014** | 292 | -38.6 | na | na |
| 2015** | 369 | -71.7 | -92.8 | 0.68 |
| 2016 (restated) | 382 | 28.5 | 9.5 | 4.75 |
| 2017 | 406 | 25.6 | 3.6 | 4.48 |
| % change | +6 | -10 | -62 | -6 |
| Ex-div: | 12 Apr | |||
| Payment: | 17 May | |||
*Includes intangible assets of £667m, or 183p a share **Pre-IPO | ||||
