Anexo Group PLC (LSE:ANX) - ISA Investment?Please note on TradingView the chart shows the firm has been listed longer than July 2018, I think this is a "ghost in the machine".
Sector: - Industrials (?) Legal Accident Managment Firm
How found: - Anexo keeps cropping up in my various feeds and forums from time to time. Looking at the chart it has been a steady rise in share price since inception.
Company Background: - Incorporated Mar 2018, public since Jun 2018. 411 employees. Basically, if you have a car/bike accident (no fault claimants and whom are impecunious (no-money)) Anexo will handle the full process, including injury claims. There are two parts of the firm the lawyers (Bond Turner) and Edge (Vehicle Hire, they have been criticised for charging £250+ car hire daily charges). Recently expanded from Liverpool to Bolton and Leeds. More at anexo-group.com/archive/presentations/capital-markets-day-nov-2019.pdf
The company only accepts “no fault claimants” this improves the odds of a successful claim and profits (half fail this test). The main claimants are accident victims who do not have the cash available (impecunious) to hire a car and fund a repair, argument with the insurance company, effectively Anexo funds the process. The process can be long up to a couple of years before pay-out. Clients are sourced via referral from garages and accident repair centres (not from insurance companies).
Ratios: - PE 2.4 (on future earnings), Dividend Yield 1.38%, Dividend Cover 6.7, Operating Margin 27.2%, Market Capital £200M (Jan 2019), Relative Strength 1y 36%, 6m 1.9%, 3m -8%, 1m 2.5%.
Rough Technical: - This share has only recently come to market, in the last 12 months it has traded 115p (until April 2019) up to 200p (Nov 2019). There was a large sell off of the shares between the 6-16th November 2019 (no sure why).
Liquidity: - Average daily share volume over last 3 months is 50K, this is below my threshold rule of 120K. Basically the main holders of the shares are the Directors holding 78% of the shares and various other funds holding the remaining shares. I have found it difficult to access how many shares are in the publicly available float; though not many when you consider the transaction volumes. Last Directors dealings were July 2018 for purchase of £20k of shares.
Brokers Opinion: - Arden Partners and Progressive Equity Research have the share as a strong buy with a price target of 345p ( 185p Jan 2019), so 90% above the present price. How do they calculate these prices, baffling.
Spread: - spread 386bps, near my personal limit.
Beta: - positive against the market, but company to young to calculate.
Accounts: - Turnover at 1H (split 60% repair / hire and 40% legal) Turnover rapid increase over recent period with 1H up 55%, and projected turnover of £78M December 2019E with around 30% operating margin. EPS growth of 19.6%. Turnover is recognised on settlement, so reasonably prudent. There are other figures I have seen, but it is too early to put too much reliance on these to predict the future.
Main Risks: - Cash-flow management – the pay-out times on cases seem to be up to 2 years, so working capital management is a risk, you need enough cash in the bank to fund the debt pipe. A recent IPO raised £25M (target £45M), so the market sees risk. New to market with low liquidity of shares, so price discovery is difficult.
Main Favourables: - Sales recognition appears to be sensible.
Declaration: - No Interest in this share presently, was thinking per the title re my ISA investment account – but more likely to have a small holding via spread bet (as easier to control the risk). I presently feel due to the lack of liquidity, new to market that I cannot calculate a fair price. RSI is 64 so might be pull back yet. Plus as with Burford Capital these legal type businesses can have volatile share prices for obvious reasons. Lots of recent articles on the net on this share, so have a gander. So I will probably monitor the share and come back to review at a later date.
