Edison Investment Research Limited
London, UK, 16 September 2022
Cenkos Securities (CNKS): Flexible model well suited to market conditions
Capital market activity slowed sharply in H122, affecting Cenkos’s results, but the group’s control over fixed costs and variable compensation lessened the impact on underlying profit. While trading conditions remain difficult, Cenkos has increased its client base, invested in staff and retains a strong balance sheet so it should be well positioned to benefit once market activity recovers.
Cenkos shares trade on a price to book value of 0.9x, which compares with a 10-year average of 2.1x. Using an ROE/COE model suggests the current price is discounting a return on equity (ROE) of 9.1%. While trading conditions are currently unfavourable, this appears cautious in comparison with the five-year average ROE of 11%.
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