Burford Capital's (BUR) share price rise has been nothing short of meteoric over the past two years, so it’s unsurprising that a substantial step-up in investment income and operating profit resulted in a 30 per cent jump in the market price on results day. Both metrics more than doubled for the litigation finance group – testament to management’s ability to back the right legal cases.
Cash receipts from concluded litigation rose two-thirds to a record $336m (£241m). That takes the total amount of concluded investments to $773m since the group’s inception in 2009 – equivalent to a return on invested capital of 75 per cent. Post year-end, it sold its investment in the Teinver case – relating to the expropriation of two major Argentine airlines by Argentina’s government – into the secondary market for $107m, banking an impressive 736 per cent return on its invested capital.
That allowed it to reinvest more capital, committing $698m last year, which took its investment portfolio of outstanding investments and undrawn commitments to $1.5bn, up more than three-quarters on 2016. More than half of that total relates to portfolio investments, such as financing cross-collateralised pools of client’s claims.
Analysts at N+1 Singer expect adjusted pre-tax profit of $275m during the 12 months to December 2018, giving EPS of 125¢ ($265m and 127¢ in 2017).
| BURFORD CAPITAL (BUR) | ||||
| ORD PRICE: | 1,422p | MARKET VALUE: | £2.96bn | |
| TOUCH: | 1,422-1,426p | 12-MONTH HIGH: | 1,430p | LOW: 700p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 17 | |
| PREMIUM TO NAV: | 270% | NET CASH: | $135m | |
| Year to 31 Dec | Net asset value (¢) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2013 | 172 | 2.1 | 1.3 | 5.23 |
| 2014 | 187 | 47.3 | 22.2 | 7 |
| 2015 (restated) | 208 | 67.9 | 31.5 | 8 |
| 2016 | 286 | 110 | 56.0 | 9.15 |
| 2017 | 384 | 249 | 127 | 11 |
| % change | +34 | +126 | +127 | +20 |
| Ex-div: | 31 May | |||
| Payment: | 22 Jun |
