ULS Technology gains market share

Tip Updates 

ULS Technology gains market share

BUY

Tip Update: Buy at 134.5p

Tip style
GROWTH
Risk rating
MEDIUM
Timescale
LONG TERM
Our previous tip
We said BUY at 107p on 11 May 2017
Tip performance to date
+26%

Flat transactional volume in the housing market should have been bad news for ULS Technology (ULS), but the online technology platform provider overcame this by increasing its market share. This helped to boost underlying cash profits by 25 per cent to £6.4m.

Headline profits were lower, but this was due to an increase in the estimated earnout payable on the December 2016 acquisition of Conveyancing Alliance Holdings (CAL) which put in a strong performance. Through CAL, ULS is now able to provide conveyancing to both smaller mortgage intermediaries and estate agents. It also has its own technology platform (Estateagent4me) to enable contact with home sellers before they are potentially sold conveyancing from the estate agent. Most of its revenue is generated from charging solicitors for business put their way through its platform.

ULS continued to invest in new technology. And as well as offering services to mortgage intermediaries, it also provides white labelled B2C conveyancing platforms, which enables its platform partners to offer conveyancing services directly to their customers such as Home Owners Alliance, where ULS has a 35 per cent stake. There is also a platform to help lenders with their remortgaging conveyancing, where ULS managed to increase its market share from 4.8 per cent to 6.1 per cent.

Analysts at Numis Securities are forecasting underlying pre-tax profits of £5.8m and EPS of 6.8p for the year to March 2019 (from £5.5m and 6.7p).

ULS TECHNOLOGY (ULS)  
ORD PRICE:134.5pMARKET VALUE:£87m
TOUCH:133-134.5p12-MONTH HIGH:161pLOW: 116p
DIVIDEND YIELD:1.7%PE RATIO:44
NET ASSET VALUE:14p*NET DEBT:20%
Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201416.32.3nanil
201516.11.51.81.34
201620.73.13.72.1
201722.33.54.42.2
201830.72.73.12.3
% change+38-21-31+5
Ex-div:5 Jul   
Payment:3 Aug   
*Includes intangible assets of £17.7m, or 27p a share

 

IC View

Shares in ULS have risen 8 per cent in the last year, and debt has been cut thanks to its strong cash flow. So we’re sticking with our buy tip (107p, 11 May 2017).

Last IC View: Buy, 152p, 27 Apr 2018

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