Two years after implementing its strategic plan, Brewin Dolphin (BRW) is in a growth phase, says chief executive David Nicol. Its efforts consolidating its offices and focusing on higher-margin discretionary wealth management work have paid off. It gained record net discretionary fund inflows including transfers of £2.3bn during the year to September, taking the total under management to £33.8bn. That put the wealth manager on track to meet its target to increase discretionary funds by one-third via net new business alone by 2020.
Overall funds under management rose by 13 per cent to £40.1bn. That compared with a 6 per cent increase in the MSCI WMA Private Investor Balanced Index. Growth in the proportion of discretionary funds meant core fee income was up 16 per cent to £208m, while commission income continued to decline.
Management broadened its direct client product range, launching wealth planning and investment advice provider WealthPilot. The product is a lower cost, simplified version of its core service, aimed at a broader audience. On the other end of the spectrum, it is also looking to develop a product for clients with more sophisticated wealth planning needs. On the intermediary side which accounted for 90 per cent of net new fund growth a passive version of its Managed Portfolio Service platform was introduced.
Analysts at Cantor Fitzgerald expect adjusted pre-tax profits of £80m for the year to September 2018, giving EPS of 22.3p (from £70m and 19.6p in 2017).
The shares are up on our buy tip (331p, 22 June 2017) and trade at 16 times forward earnings. Thats a discount to the sector average. With the restructure over, we believe there is further upside to come. Buy.
Peel Hunt has maintained its buy rating on Brewin Dolphin (BRW), pointing to continuing strong fund inflows to the wealth manager and a low valuation.
Brewin Dolphin yesterday reported a 3.7% jump in assets, with record revenues of £77.3 million for the three months to the end of June.
Brewin Dolphins update highlights the continuing momentum in net business, with positive flows from intermediaries and into the managed portfolio service, said analyst Stuart Duncan.
Brewin is moving to the next phase in its development focusing on delivering improving levels of organic growth, in addition to considering further corporate activity to complement the recently acquired Duncan Lawrie [investment] business, he added.
The valuation multiple now stands at 11.1 times 2017 profits, which remains at a material discount to others in the sector.
Duncan maintained his 390p target price on the shares, which rose 1% to 354.6p yesterday.
"Shares held by private investors have reached a post-crisis record of Â£238.8 billion (as at 13 June), just shy of all-time record high of Â£247.3 billion reached seven years ago in 2007, a report by Capita has revealed.Joe Public's share of UK plc ..."
Share price doesn't often move by this much. Level of trading seems fairly average. Sells are bigger than buys but none of them huge. Can't see any explanation for the large fall. Still a bit too pricey but starting to look interesting again.
Random Hunter I traded BRW from around £1.36 to £1.70 as they fitted a 5% return today's results onerous leases and redundancy costs affected the profitability severely!!!
GOOD LUCK to those still holding
LONDON--Financial services company Brewin Dolphin Holdings PLC (BRW.LN) Wednesday reported a 44% decline in first half pretax profit due to significant restructuring costs and material provisions for onerous leases, but maintained its interim dividend payment, saying that improved equity market sentiment and signs of a return in economic confidence is resulting in positive trading conditions.
-Pretax profit for half year ended March 31 amounted to 6.9 million pounds, compared with GBP12.3 million in the year ago period.
-Onerous lease provision of GBP5.9 million versus nil.
-Redundancy costs GBP3.4 million versus GBP87,000.
-Total managed funds GBP28.1 billion at March 31, compared with GBP25.9 billion at Sept. 30, 2012 and GBP25.7 billion at March 31, 2012.
-Adjusted pretax profit GBP23.8 million versus GBP18.9 million.
-Total adjusted income GBP139.0 million versus GBP127.0 million.
-Diluted earnings per share 2.1 pence versus 3.5 pence.
-Adjusted diluted earnings per share 7.1 pence versus 5.5 pence.
-Board declares a maintained interim dividend of 3.55 pence per share.
BRW was a good buy last summer with a yield at over 5%, growth in funds under management almost every quarter and the promise of cost savings. The growth also benefited from a one-off reduction in the amount they have to pay into the Financial Services Compensation Scheme. I got in at about £1.40 and out at about £1.85 and picked up a nice divi as well. However, there have been issues with staff changes, relocation issues and the funds under management haven't maintained their rate of growth. They are also moving to a different client charging structure and I not sufficiently well versed in such things to predict how that might affect their funds under management, which seems to be the key thing that buffers the share price up and down. I would be cautiously optimistic and say this is a hold but I wouldn't be jumping in until the price is well below £2.00.
This certainly will improve the performance of the business going forward. By their own admission Corporate Advisory and Broking failed to meet its own targets over the last two years and certainly remains under pressure in the current environment.
As they point out in the release today the disposal will "...simplify the structure of the Group into that of a pure investment manager..."
Corporate Advisory and Broking with BRW represents less than 5% of sales, profits and employees.
Agree BAKone, 160 is an historical area of resistance/supply (as well as recently as 3 Dec. also as far back as March 2008), so it could be expected to be so again. Although I was surprised at the extent of the reaction.
147-150 should hold as support, although if it breaks this then 132-135 has shown good demand.
This as you say looks like a purely technical move on higher than average volume, as fundamentally it is a reasonable investment, with growth and improved weighting on the higher margin discretionary business.
looks like a purley technical move - it back tested the 160 resistance line so traders took the opportunity and down we go. 150 should hold as support I think - so I'm happy holding (holding long-term anyway). Mutandis - your thoughts??
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