JTC Group “delivering organic revenue growth at the top end of its guidance” says Zeus Capital

JTC Group plc (LON:JTC) interims confirm the strength of JTC’s business model and cash conversion, and management has restated its medium-term guidance.

  • Revenue rose 15.2% to £53.7m (1H19: £46.6m), reflecting a combination of strong net organic growth (+10.1%) and growth from acquisitions (+5.1%);
  • LTM organic revenue growth at ICS was 8.9% and PCS was 11.8%;
  • Underlying EBITDA rose 11.2% to £17.9m (1H19: £16.1m) with underlying EBITDA margin falling 1.2pp to 33.3% (1H19: 34.5%);
  • Net debt at period end was 2.0x underlying proforma EBITDA (1H19: 1.9x);
  • Underlying cash conversion was strong at 108% (1H19: 103%);
  • Interim DPS was increased 41.2% to 2.4p (1H19: 1.7p);
  • Management’s medium-term guidance remains unchanged:

­    8% to 10% net organic revenue growth p.a.;

­    33% to 38% underlying IFRS 16 EBITDA margin;

­    up to 2.0x Net debt to underlying EBITDA;

­    85% to 90% cash conversion;

  • JTC recent acquisitions of Sanne Private Client unit and NES Financial JTC are fully integrated but are generating less revenue than previously expected;
  • 1H20 new business new business wins totalled £8.6m, including NESF with ICS division contributing £6.9m with an organic pipeline of £29.3m (1H19: £22.2m) and PCS division contributing £1.7m (1H19: £2.7m) with an organic pipeline of £13.3m (1H19: £11.0m), so total pipeline rose 28.3% to £33.2m.

Outlook: Nigel Le Quesne, CEO of JTC PLC, said: JTC “will continue to focus on the smooth integration of the Sanne private client and NESF businesses while simultaneously working to grow the Group through client service excellent, improving client efficiencies and making even greater use of technology

Zeus view: JTC’s is delivering organic revenue growth at the top end of its guidance of 8% to 10% p.a. and has strong pipeline which bodes well for 2H and 2021. Lower than expected contribution from recent acquisitions lead us to trim our revenue and EBITDA forecasts, but for 2020 we maintain our adj EPS at 24.1p. For 2021 we expect 10% growth to 26.5p (current Bloomberg consensus is 27.9p).

Valuation: JTC Group, at 450p a share, is trading on 18.7x Zeus forecast for 2020 adj EPS of 24.1p (Bloomberg consensus: 24.0p). In our opinion stocks, like JTC, with prospects of high-quality revenue and EBITDA growth deserve to trade on an earnings multiple of 20x, even in difficult markets.

Click to view all articles for the EPIC: ,
Or click to view the full company profile:
    Facebook
    Twitter
    LinkedIn
    JTC Plc

    More articles like this

    Fintel plc

    Fintel core revenue growth is higher than Zeus forecast

    Fintel plc (LON:FNTL), the leading provider of Fintech and support services to the UK retail financial services sector, has released a trading update for the six months to 30 June 2022, which reveals: Core revenue grew

    OnTheMarket Plc

    OnTheMarket analyst Zeus confident in forecasts

    Foxtons, one of London’s leading estate agencies with more than 50 interconnected branches across London, has signed an agreement to advertise its UK residential sales and letting properties at OnTheMarket plc (LON:OTMP). Zeus view: Foxtons, the

    SpaceandPeople analyst Zeus restores estimates and valuation

    SpaceandPeople plc (LON:SAL) secures, sells, and manages flexible space for brand experiences, short term promotions and retailing in high footfall venues for its customers, including in shopping centres and travel hubs. The Group has issued a

    Lookers Plc

    Lookers shares are still undervalued says Zeus

    Lookers plc (LON:LOOK) has released an H1 trading update reporting a continuation of strong performance year to date. H1 2022 underlying PBT is expected to be c. £45m and Management anticipate full year PBT will also

    Inchcape

    Inchcape performance exceeding expectations says Zeus

    Inchcape plc (LON:INCH) has released another positive trading update, with performance exceeding expectations so far this year. This follows on from a positive Q1 update on 28 April. Through quarterly improvement in Distribution volumes and operating

    boohoo Plc

    Boohoo Group analyst Zeus sees a strong performance in Q1

    ¨ Q1 financial highlights: Boohoo Group plc (LON:BOO) revenue of £445.7m is -8.3% YOY vs. a strong comp (Q1 FY22 revenue +32.1%), in line with Zeus’s forecast and management’s previously stated guidance. Gross sales growth remained