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Alpha FMC is coping well

Despite management cautious of its balance sheet, the consultancy's top-line looks well protected
Alpha FMC is coping well

The 12 months to March marked a heady period of expansion for Alpha FMC (AFM), most clearly reflected in an 18.3 per cent uptick in gross profits to £34.4m. During the period, the asset management consultancy acquired and integrated two smaller peers, increased its bench of consultants by a fifth, client numbers by almost two-fifths and a global office network to a dozen.

IC TIP: Buy at 190p

Since then, the business appears to have coped admirably with the logistics of lockdown and any financial shocks to clients. The project pipeline remains well-supplied by new mandates and extensions; chief executive Euan Fraser says fee pressure “has been isolated to a handful of clients”, and the transition to home-working has been so seamless that part of the lease on a three-floor London office has already been given up.

Still, management isn’t taking any chances. Despite entering June with a £23m net cash position, the group has cancelled its final dividend and drawn down £5m of a recently-extended £20m credit facility with Lloyds. In theory, this provides some protection from a fresh market correction or a second spike in Covid-19 infection rates. But the extra liquidity and flexibility could help the group act on its acquisition strategy once deal-making is once again possible.

Panmure Gordon expects adjusted earnings of 15.6p per share for the year to March 2021, and 16.3p in FY2022.

Alpha Financial Markets Consulting (AFM)  
ORD PRICE:190pMARKET VALUE:£191m  
TOUCH:181-198p12-MONTH HIGH:254pLOW:96.1p
DIVIDEND YIELD:1.1%PE RATIO:29  
NET ASSET VALUE:90.6p*NET CASH:£18.3m**  
Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201626.55.70.00nil
201742.2-3.3-4.73nil
201866.01.5-0.495.17
201976.012.59.056.00
202088.99.36.112.10
% change+17-26-33-65
Ex Div:n/a   
Payment:n/a   
*Includes intangible assets of £90m, or 89.6p a share
**Includes lease liabilities of £2.7m