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Zeus have released a new 23 page note this morning. They don't have a price target, but summarise with share upside of >100%:
"Valuation:
Anexo trades on an FY23E EV/Sales of 1.0x, an EV/EBITDA (inc. lease liabilities) of 3.4x and a P/E of 4.2x with a prospective dividend yield of 2.4% based on a conservative c.10% payout ratio of adj. EPS. Relative peer multiples imply share price upside of >100%. Our forecasts do not assume any benefit from the Mercedes Benz Emissions Claim, despite the manufacturer having already paid-out in the United States. An agreement in the Group Litigation Action currently in process would result in additional material cash inflows in 2024."
They also state:
"On an EV/EBITDA basis, comparable peers suggest Anexo should trade at least double its current 3.4x multiple. Assuming Anexo traded in line with the average of the UK legal services sector FY23 P/E of 9.5x would imply a share price of 149.4p, upside of 125% versus the current price. Removing Keystone Law, which trades at a premium to the wider sector, would still imply a PE of 7.3x, or 175% upside to current levels. Our forecasts do not include any benefit from a potential agreement in the ongoing Mercedes Benz Emissions Claim, despite the manufacturer having already paid -out to consumers in the United States. Anexo is representing 12,000 claimants in the Group action,. The Group also sees scope for further action against at least six other major manufacturers over time."
Big rise tomorrow.......Fair value much more....
Research tree
How can you access WH Ireland report if you don’t mind me asking ?
New article as already linked:
https://www.investorschronicle.co.uk/ideas/2023/08/22/anexo-s-discount-still-has-room-to-narrow/
"Anexo's discount still has room to narrow
The credit and legal services provider is rated on a PE ratio of 4 even though the outlook is improving
August 22, 2023"
He already had it as a recovery buy from July
https://www.investorschronicle.co.uk/ideas/2023/06/13/anexo-is-now-oversold-and-undervalued/
Has moved from HOLD to BUY
https://www.investorschronicle.co.uk/ideas/2023/08/22/anexo-s-discount-still-has-room-to-narrow/
I suspect we'll see 80 p plus quite soon. The valuation is a joke and if it doesn't change, DBAY (or someone else) might make an approach.
Arden had a 300p price target before being acquired by Zeus Capital earlier this year. Haven't seen a new note from Zeus yet today.
WH Ireland have raised their forecasts as stated previously - they note in particular that:
"issues in rented housing, both private and social, and which have been well-publicised in the press, suggest that a large, relatively untapped, pool of potential clients exists in the Housing Disrepair sector."
They summarise:
"Forecasts: Revenue and PBT forecasts are lifted for FY23E bearing in mind the VW settlement, which was not included in our forecasts. Hence FY23E PBT is raised by 40% to £25.2m, and EPS from 11.8p to 15.0p (+27%). Bearing in mind the “cash first” mantra, and reflecting a strongly growing business, we are pleased to be able to improve our net debt forecasts, with a new FY23E forecast standing at £66m, a 7% improvement YoY, feeding through to £63m in FY24E (-10%)."
I'd been bearish here in the recent past as they hadn't shown any ability to meaningfully reduce net debt, clearly that has changed looking at todays results...
Price to NAV is around 0.5x now (£154m net assets vs £78m market cap), last year at this time at was nearly 1x (£137m net assets vs £144m market cap)
The diversification into housing disrepair is also a positive, especially if it shortens the working capital cycle. Overall it does look very cheap down here based on the progress YTD.
The current market cap is a joke. £25m profit. Take a basic p/e of 6 and we’re looking at 100% upside.
Significantly undervalued now.
Very good H1 results today, with a huge reduction in debt even excluding the VW case winnings. Housing cases are growing fast (48% year on year) and should therefore continue to improve cash flows. There's a definitive statement that further growth won't be needed to be funded from debt.
And with 8.6p EPS in H1 alone there's great confidence that forecasts for the year will be met.
At these depressed levels ANX would seem to offer minimal downside and potentially large - and quick - upside.
With DBAY in the background holding 28.51%, perhaps this is the time for them to raise to 29.99% and/or come back in with another bid.
WH Ireland have increased their FY23 PBT forecasts by 40% to £25.2m (from £18.1m) and raised EPS to 15p from (11.8p).
Social housing is more relevant the private housing as housing disrepair lawyers generally don't take on private landlords. 11% of social housing fail Decent Homes Standard..
source - https://www.theclaimsguide.com/housing-disrepair
Interims confirm the badly worded RNS and net cash from VW was indeed net profit. Lots of details today but this appears to be developing according to my modelling and wh Ireland had to revised theirs as they’d not appreciated the progress ANX is making. Still nothing in the price for growth and for the Mercedes claim
Gla
“Strong growth is forecast for H2 2023 resulting from a steady increase in vehicle numbers.”
Very good update. Cash collection up. Debt debt. Still growing. Valued at £73m - honestly ludicrous. Should see a material rerate here now
Category 1 hazards – deemed the most serious, with the potential to cause death or loss of limb – are found in 14 per cent of private rented homes, according to Labour analysis of the latest English Housing Survey, which covers 2021 to 2022. This figure is up from 13 per cent the previous year.
Around 990,000 privately rented homes (23 per cent) fail to meet the “decent homes standard” according to the 2021-22 data – a higher proportion than in the social rented sector (10 per cent) and homes that are owner-occupied (13 per cent).
(Source: https://www.independent.co.uk/news/uk/politics/rent-tenants-landlords-uk-housing-b2391050.html)
Not long to the Interims now - 3 weeks.
Reduction in debt, no collapse in profits and a reassuring outlook for H2 should result in a decent rerate from current p/e of 3-4.
I look at this more positively in that it is likely to be cases where the risk of dealing with fixed income cases have caused Bond Turner to reject cases in the past as too risky. My impression is that many impecunious drivers will be non-native speakers particularly in London. It's fair to say it's a big deal for ANX, because to RNS some news then it must be materially important to the price of the share.
Seems a lot of effort, to get case law changed when it will seemingly have little material impact on earnings gong forward. Seems more of a vanity thing. Maybe lots of Anexo's clients are non-English speaking (or they can say they are) and it's another way they can make money on every case.
What a waste of time that was.
Looks like there was a big block trade yesterday afternoon - £600k + worth. Hopefully see a bounce here soon.
Https://www.investorschronicle.co.uk/ideas/2023/06/13/anexo-is-now-oversold-and-undervalued/
So a p/e of 5.4 but when you factor in the undisclosed WV profit ( at least £7m) the p/e drops to 3.5.
Company's brokers *
Must be close - ludicrous state of affairs. RSI in the toilet. forward 1yr p/e of 3-4. Could double in a week this. Just need some clarity from the company.
Someone has dumped a million or so shares over the past week or so. Down 40% on the year seems unwarranted. Forward p/e of 3.5. Debt now reducing, as per broker forecast and recent VW settlement. Good free cash flow. Change of strategy. RSI of 8!!! Share price steadied. Should see a slow rerate to £1 IMO