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Knights profit warning today. SP down 50%. Fairly obvious read across to Keystone.
Large drop in the Sp with no obvious reason. Anyone know why? RNS seems positive - what have I missed?
Alexandra Jackson mentions Keystone Law #KEYS at 6m05s in the latest PIWORLD interview
Watch the video here: https://www.piworld.co.uk/education-videos/piworld-interview-with-alexander-jackson-selecting-winning-stocks/
Or listen to the podcast here: https://piworld.podbean.com/e/piworld-interview-with-alexander-jackson-selecting-winning-stocks/
Stunning set of results, more growth to come, constrained competition, what's not to like?
the competition has already been there for the last 5-10 years, but not on the scale and profile (and with the back office) that Keys have. It's that outsiders will find hard to compete with. I'm strapped in for a while yet.
If the prediction that one third of all lawyers will be "freelance" in five years time is correct, Keystone will keep growing for at least five years. Of course competition may nibble into that growth, but the way Keystone is set up makes that unlikely. A top quality long term hold for me.
Bought in about twelve months ago - now up 42%. So the perpetual question - do I cash out or see how high it will go? Keys platform model makes it more nimble/ interesting than other listed law firms but is there a limit to how far that can take it? Interested to hear thoughts.
WW
And here is the inside industry view on why: News release 25 February 2021
https://www.cityam.com/exclusive-legal-consultant-model-to-become-dominant-among-mid-market-law-firms/
Legal consultant business model predicted to dominate high street
The legal consultant business model, operated by the likes of Keystone Law, Gunnercooke and Taylor Rose, will become the dominant model among high street and mid-market law firms. According to mid-market investment bank Arden, the Covid-19 pandemic has acted as a “catalyst” for industry disruption, exposing the “poor management and outdated operating models of many law firms”. It estimated that a third of all UK lawyers could be working under the legal consultant banner in five years' time. Arden said: “With a significant unrealised market opportunity, an ever-increasing market share and an attractive and cost-effective recruitment proposition, it is easy to see why the consultancy model makes such a strong investment case.”
I wasn't struggling with it, I said I was wondering, just the same as you are now, and so I gave it some proper thought. The profits are moving up from a relatively low base and in a couple of years or so that PER could come right down, relative to today's share price. Your last point justifies my conclusion. The flip side is that maybe there needs to be a pause for the profits to catch up with current valuation. That's the only question really. But I'd like to think the market sets the PER and will stick with it for now at least
Feeks - dont get me wrong, I like the model. Its just the valuation. If you were struggling to justify 30x PER then 49x....!
Only point I dont agree with is reference to Magic Circle profits - completely different sector dynamics. Like comparing the profitability of Manchester United to Rochdale.
It's an interesting question. I originally wondered about whether a PER of 30 was sustainable. I think one has to judge the prospects of future growth, including over what period that growth can be sustained, and the sort of profits made by the biggest law firm competitors in the market. The brand is an important function of all that.
The key points are these (IMO):
- that the model is designed for long term growth off a relatively fixed cost base
- that growth can potentially continue for many years as new lawyers arrive, and because there are other territories which can be added too, just as they have been added.
- that the very biggest Magic circle law firms make vast profits far in excess of what Keystone does now.
PER 49x for a law firm....really ?
See the future.. online
That's my view too. It will just keep doing what it does so successfully, adding and growing the bottom line. Not a fancy AIM investment but a rock solid one.
Excellent update. This stock will grow and grow over the next few years.
Another excellent update this morning, the expected annual profit has been adjusted from £4.6m to £5.1m, a more than 10% increase. No wonder the share price has responded.
The Board is pleased to report that, in spite of the disruption caused by the second wave of COVID-19, the Group has performed well throughout the second half to date. During the period, Keystone has continued to see recovery across all areas of its business with like for like performance having now returned to very near pre-COVID levels. As a result, the Group now expects to deliver profits for the year comfortably ahead of current market expectations(1).
James Knight, CEO of Keystone, said: "We are delighted with the second half performance to date. Whilst the much feared second wave of COVID-19 has arisen, unlike the first wave in the Spring, it has had a limited impact on the performance of the Group."
(1) The Board considers current market consensus profit to be adjusted PBT of £4.6m
The information contained in this announcement is deemed to constitute inside information for the purposes of the Market Abuse Regulation (EU) No 596/2014.
Results "Comfortably ahead of market expectations"., says James Knight
Should be getting notification of date of results this week...hopefully will stop the slide
Not sure it is unique, but certainly given the complexity (unnecessarily so) of doing business and holding back the tide of law suits it should not be short of customers.
My concern is buy in point as I am guessing that between company declarations there is little in the way of news to move this share upwards and it might drift further south.
I made the mistake of not holding (but dipping in and out) Burford Capital at around 220 not realising the appetite for suing coprorations was such huge and profitable business.
Still, I'll see if this goes to 350/340 before buying in as although I avoid shares with this wide a spread normally I think you are right,but becuase it is one to buy and hold for a number of years.
There is little free float of this share... A unqiue share with great growth potential and possibly replicable in many territories..Hence I believe the gap between Bid and Ask...
The sheer number of Sectors covered by Keystone should give it a good cushion against any economic downturn... and with Brexit / non Brexit on the agenda .. Legal and related advice will be in great demand.and Keystone should be a beneficiary..
Sectors
Aviation
Education
Financial Services
Food & Beverage
Healthcare
High-Net Worth Family Office
Hotels, Hospitality & Leisure
In-House Legal
Law Firm Support
Marine & Shipping
Media
Private Individual
Professional Practices
Property Development
Retail
Satellite, Space & Communications
Sports
Technology & Telecoms
Any thoughts given the current spread on this share. I was considering buying some for my SIPP and the current sp and initial trading figures all seem decent with no apparent huge overheads for the business. Bit like Burford Capital which has rocketed on the back of funding law suits rather than legal services.
How much exposure will Keystone have across the multitude of sectors its provides legal services to in a downturn though.
I regretted not holding in my SIPP Burford but rather trading it in 2017 mostly.
You mean downwards??
These shares appear to moving at rocket speed...
Perhaps the presentation , perhaps the Interim Results Presentation ( Sept 2018) has somethong to do with the rise
http://www.keystonelaw-ir.co.uk/archive/presentations/Investor-Presentation-Sep-18.pdf