Alpha Financial Markets Consulting Share Price (AFM)

11-Apr-24 Berenberg Bank Buy - 420.00 Reiteration

https://www.proactiveinvestors.co.uk/companies/news/1045098/alpha-financial-share-price-offers-attractive-entry-point-analysts-1045098.html

Peel's target price is 395p, versus the last close at 312p, while Stifel's is a more bullish 440p.

Https://www.proactiveinvestors.co.uk/companies/news/1034063/alpha-financial-hit-by-longer-sales-cycle-in-first-half-but-growth-plans-undimmed-1034063.html

In the period being reported the company has paid out £12M as a final dividend. Looks like there was some 'one off acquisition costs too. I dont see what bearing the equity has on the front end sales of the company, Clearly growth has slowed, but according to them they expect more in H2. Its a hold from me, though I managed to sell a few this morning in my trading account for less than 1% profit! (I have actually done well here recently, buying the dip twice and selling all the way up to £4).

"The Group's net cash position was £16.1m as at 30 September 2023 (31 March 2023: £59.2m), reflecting the normal H1 timing of payments, a further £18.6m of acquisition consideration payments, including £1.7m of employment-linked amounts, and the payment of the £12.0m FY 23 final dividend in the half. During the period, the Group also provided £3.8m funding to Alpha's EBT to purchase 1,033,954 shares at the prevailing market share price. These shares will be held in the EBT, a discretionary trust, and are intended to be used to satisfy future exercises of share options by employees, including the Directors of the Company. Alpha was drawn £10.1m on its RCF at 30 September 2023, to assist with managing currency requirements in the period. "

The Board is pleased to declare a maintained interim dividend for FY 24 of 3.70p per share (H1 23: 3.70p), which will be paid on 21 December 2023 to shareholders on the register at the close of business on 8 December 2023.

Shareholder equity is down over £6m since year end and retained earnings are now below £1m. Dividend is looking precarious and cashflows are awful. I used to really like this business. No position but I'd sooner be short than long now.

I note Investec maintains a £6.72p target and sticks with a total div of 15.6p which isn't a bad yield.

PE of 13 based on normalised EPS looks decent value given the growth prospects, yield and net cash forecast to be £55m.