Mortgage Advice Bureau Hybrid journey to 2020

Revenue & market share growth through adviser numbers & productivity

Since its IPO in November 2014, Mortgage Advice Bureau (Holdings) Plc (LON:MAB1) has delivered on its strategy for growth and built its market share from 3.0% in 2014 to 4.1% in 2016.

Over the three years to December 2016, MAB has increased:

* adviser numbers by 22% 3-year-CAGR to 950 advisers;

* revenue per adviser by 8% 3-year-CAGR to £105,000 pa;

* revenue by 32% 3-year-CAGR to £111m;

* gross profit by 29% 3-year-CAGR to £25.6m;

* PBT by 34% 3-year-CAGR to £12.5m;

* profit after tax by 35% 3-year-CAGR to £10.2m.

In addition to increasing market share by increasing adviser numbers (management targets 15% pa) management’s strategy focuses on:

* enabling technology

* brand and distribution

* strategic investments and JVs.

MAB’s annual conference showcased its technology, and its brand and distribution initiatives, many of which involve strategic investments (e.g. Vita, Freedom 365). In this note, we draw together comments from this conference and our view of MAB as a “network” which enjoys “network economics”. We see increasing returns to scale and, on the demand side, improving revenue stream quality.

Investors can see evidence of the quality of MAB’s business model by comparing consensus earnings forecasts to actual results for the 2.5 years it has been listed on AiM. Our analysis (page 8 of this note) shows that MAB’s 2014, 2015 and 2016 revenues, adj PBT and EPS have been remarkably close to forecasts. In our opinion the quality of MAB’s growth should be reflected in its valuation multiples.

Zeus Valuation: At 405p Mortgage Advice Bureau (Holdings) Plc shares are trading on 17.6x current year’s earnings and, with prospects of 21% growth in 2018, a Price-Earnings-Growth ratio of 0.8x. We calculate that on our forecasts and assuming a terminal value based on a 4.3% dividend yield, the current price of 405p is consistent with a risk discount rate of 21.4%.

Click to view all articles for the EPIC:
Or click to view the full company profile:
    Facebook
    Twitter
    LinkedIn
    Mortgage Advice Bureau (Holdings) Plc

    More articles like this

    Mortgage Advice Bureau (Holdings) Plc

    Is the prospect of longer tenancies good or bad news?

    In early July, the Government opened a consultation into the benefits and barriers to landlords offering longer tenancies. This is the latest step in its commitment to increase security of tenure for tenants in the PRS,

    Mortgage Advice Bureau (Holdings) Plc

    A helpful guide for first time buyers

    Buying your first home can be quite daunting. It’s likely to be the biggest financial commitment you’ll ever have, so you need to know that you’re making the right decision. Searching for a mortgage can be

    Mortgage Advice Bureau (Holdings) Plc

    What does the interest rate rise mean for me?

    The Bank of England has raised its bank rate today to 0.75 per cent and we’re here to cut through the jargon and answer, what does this mean for you and your mortgage? I’m on a

    Mortgage Advice Bureau (Holdings) Plc

    National Mortgage Index July 2018

    Mortgage Advice Bureau (LON:MAB1), Brian Murphy, Head of Lending comments: “June appeared to be consistently busy in many regions, with members of the network observing a solid number of buyer enquiries, regardless of the distractions of

    Mortgage Advice Bureau (Holdings) Plc

    August Interest Rate Decision

    Today, the Bank of England announced the bank rate would be increasing to 0.75 per cent, which could have an impact on those who are on SVR mortgages. Mortgage Advice Bureau Plc (LON:MAB1), Brian Murphy, Head of

    Mortgage Advice Bureau (Holdings) Plc

    Mortgage Advice Bureau plc another strong performance

    Peter Brodnicki, CEO of Mortgage Advice Bureau (Holdings) plc, said: “I am delighted to report another strong performance in the first half of 2018. Housing transactions have reduced slightly compared to the equivalent period last year,

    Mortgage Advice Bureau (Holdings) Plc

    MAB launches wealth and equity release proposition with Tenet

    Mortgage Advice Bureau has launched a wealth and equity release proposition in partnership with Tenet. The proposition will initially comprise 14 wealth advisers but MAB says it has “ambitious expansion plans”. Tenet is also dual authorising

    Mortgage Advice Bureau (Holdings) Plc

    Rightmove House Price Index July 2018

    Mortgage Advice Bureau (LON:MAB1) Brian Murphy Head of Lending comments: “The monthly Rightmove House Price Index provides us with an up to date ‘litmus test’ of consumer sentiment and activity in terms of the UK property

    Mortgage Advice Bureau (Holdings) Plc

    Buyers back in the market in May

    Mortgage Advice Bureau (LON:MAB1), Brian Murphy, Head of Lending comments: “May appeared to be one of the best months so far this year for some regions, with members of the network reporting a marked increase in

    Mortgage Advice Bureau (Holdings) Plc

    Halifax Price Index June 2018

    Brian Murphy, Head of Lending for Mortgage Advice Bureau comments: “The report released by the Halifax this morning indicates that house price growth appears to have steadied in May, following a somewhat lacklustre set of figures