Edison Investment Research Limited
London, UK, 14 May 2021
Numis Corporation (NUM): Very strong results, consistent strategy
In addition to successfully executing a high volume of transactions for clients in the first half, Numis continues to plan investment to strengthen and broaden its capabilities to support longer-term growth through market cycles. With over 60% of transaction fee income in H120 coming from outside the retained client base there is evidence that the company is succeeding in building a wider reputation.
The shares trade on P/E multiples in line with the average for US and European investment banks and advisory firms. At a price to book multiple of 2.3x they trade above their 10-year average and, using an ROE/COE model, the current share price implies an assumed ROE of just below 18% (the five-year average value). This is also well below the 25% ROE we estimate for FY21, so the market seems to be factoring in a wide safety margin for a prospective normalisation of activity levels.
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