Burford Capital (BUR) seems like a runaway beast. The litigation finance group posted an uplift of around a fifth in investment income and operating profit during the first half, prompting a double-digit jump in the shares. Realising gains on investments accounted for almost two-thirds of income – a greater proportion than corresponding periods over the prior two years – reflecting the pace of investment in new cases, which take longer to contribute.
The overall value of assets rose by more than a third on the prior year to $1.6bn (£1.2bn), but more than doubled in size during the past two. Cash receipts were also up 61 per cent to almost $300m, covering its debt service obligations more than 15 times.
Management made $540m in new commitments, a 10 per cent increase on last year. Portfolio finance – investments in multiple claims or paths to recovery – accounted for the lion’s share, with around $87m ploughed into single case investments. Chief executive Chris Bogart says these cases are most popular with lawyers dealing with Burford for the first time, but around 70 per cent of these will become return clients – the model is gaining in popularity.
Analysts at Numis expect pre-tax profit of $236m during the 12 months to December 2018, giving EPS of 102¢ (from $261m and 120¢ in 2017).
| BURFORD CAPITAL (BUR) | ||||
| ORD PRICE: | 1,820p | MARKET VALUE: | £3.79bn | |
| TOUCH: | 1,818-1,826p | 12-MONTH HIGH: | 1,866p | LOW: 954p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 17 | |
| PREMIUM TO NAV: | 297% | NET CASH: | $241m | |
| Half-year to 30 June | Net asset value (¢) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2017 | 339 | 135 | 63.9 | 3.05 |
| 2018 | 458 | 159 | 77.2 | 3.67 |
| % change | +35 | +18 | +21 | +20 |
| Ex-div: | 8 Nov | |||
| Payment: | 5 Dec | |||
| *£1=$1.32 | ||||
