United States

Analyst Research Report Snapshot


Brewin Dolphin: Interims and placing




Equity Development


03 Jun 2013





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Interim results showed the expected improvement in operating margins but a decline in PBT due to a jump in exceptional costs. The progressive roll-out of the new national fee structure has more than offset the loss of trail commission, and a welcome reduction in non-staff operating costs balanced the rise in staff costs excluding profit share, so most of benefit of the rise in revenue fed through to operating profit. The interim dividend was unchanged. A £40m placing accompanied the interim results, mostly to finance capital expenditure on expansion and on computer systems to improve the quality of service and to support efforts to improve profits, although some of the cash will just sit there to demonstrate the group''s financial strength to more than 150% of the FCA regulatory requirement. At 237p, up 63% in the last year, Brewin shares are less badly undervalued than historically, with its market capitalisation matching the old-fashioned benchmark of 2% of AUM. However, it is still at a discount to the sector PER and looks quite cheap against 2016 estimates of Headline EPS of 20-25p (depending on market conditions).

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