Afh Financial Group reports 94.4% Net Income growth in 2018 and 4.0 pp EBITDA Margin growth from 16.4% to 20.4%
21 Jan 2019 • About Afh Financial Group (
$AFHP) • By InTwits
Afh Financial Group reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Afh Financial Group is a fast growth stock: FY2018 revenue growth was 50.6%, 5 year revenue CAGR was 36.2% at FY2018 ROIC 14.4%
- EBITDA Margin is expanding: 20.4% in FY2018 vs. 16.4% in FY2017 vs. 8.8% in FY2014
- Afh Financial Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's in pair with industry average of 1.8%
- CAPEX is quite volatile: £0m in FY2018, £0m in FY2017, £0m in FY2016, £1m in FY2015, £0m in FY2014
- The company has highly profitable business model: ROIC is 14.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 50.6%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.9 pp from 6.0% to 4.2% in FY2018. EBITDA Margin followed a growing trend at 2.7 pp per annum in FY2014-FY2018.
Gross Margin increased slightly on 1.00 pp from 53.4% to 54.4% in FY2018. SG&A as a % of Revenue decreased on 2.8 pp from 36.6% to 33.8% in FY2018.
Net Income margin increased on 2.6 pp from 9.1% to 11.8% in FY2018. Net Income margin stuck to a growing trend at 1.9 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 0.55%. Afh Financial Group's CAPEX/Revenue decreased on 3.2 pp from 3.8% in FY2015 to 0.55% in FY2018. For the last three years the average CAPEX/Revenue was 1.0%. During the last 5 years CAPEX as a % of Revenue topped in FY2015 at 3.8% and was declining since that time.
Return on investment
The company operates at good ROIC (14.4%) while ROE is low (11.6%). ROIC increased slightly on 2.0 pp from 12.4% to 14.4% in FY2018. ROE showed almost no change in FY2018. ROE grew at 1.1 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is -1.8x Net Debt / EBITDA and 0.3x Debt / EBITDA. Debt decreased on 2.1% while cash surged on 132%.
Afh Financial Group has no short term refinancing risk: cash is higher than short term debt (970.0%).
Valuation and dividends
The company's trades at EV/EBITDA 12.2x and P/E 24.3x.
Financial and operational results
FY ended 31 Oct 2018
Afh Financial Group ($AFHP) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 15.037 | 20.977 | 24.130 | 33.639 | 50.664 | 50.6% |
| Gross Profit | 7.711 | 10.968 | 13.359 | 17.967 | 27.565 | 53.4% |
| SG&A | 6.811 | 9.213 | 11.121 | 12.320 | 17.126 | 39.0% |
| EBITDA | 1.327 | 2.627 | 3.444 | 5.511 | 10.351 | 87.8% |
| Net Income | 0.601 | 1.173 | 1.677 | 3.063 | 5.954 | 94.4% |
Balance Sheet
|
|---|
| Cash | 5.653 | 3.766 | 6.717 | 9.275 | 21.543 | 132.3% |
| Short Term Debt | 0.000 | 0.063 | 0.076 | 0.077 | 2.221 | 2,784.4% |
| Long Term Debt | 0.752 | 3.432 | 3.352 | 3.281 | 1.067 | -67.5% |
Cash flow
|
|---|
| Capex | 0.112 | 0.789 | 0.423 | 0.265 | 0.278 | 4.9% |
Ratios
|
|---|
| Revenue growth | 39.3% | 39.5% | 15.0% | 39.4% | 50.6% | |
| EBITDA growth | 9.7% | 98.0% | 31.1% | 60.0% | 87.8% | |
|
|---|
| Gross Margin | 51.3% | 52.3% | 55.4% | 53.4% | 54.4% | 1.0% |
| EBITDA Margin | 8.8% | 12.5% | 14.3% | 16.4% | 20.4% | 4.0% |
| SG&A, % of revenue | 45.3% | 43.9% | 46.1% | 36.6% | 33.8% | -2.8% |
| Net Income Margin | 4.0% | 5.6% | 6.9% | 9.1% | 11.8% | 2.6% |
| CAPEX, % of revenue | 0.7% | 3.8% | 1.8% | 0.8% | 0.5% | -0.2% |
|
|---|
| ROIC | 9.2% | 12.8% | 11.3% | 12.4% | 14.4% | 2.0% |
| ROE | 6.7% | 10.1% | 10.2% | 11.5% | 11.6% | 0.1% |
| Net Debt/EBITDA | -3.7x | -0.1x | -1.0x | -1.1x | -1.8x | -0.7x |
Peers in Financial Services
Below you can find Afh Financial Group benchmarking vs. other companies in Financial Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Starvest ($SVE) | | -52.9% | -4.8% | 346.6% | |
| Henderson Group ($HGG) | 13.8% | 13.0% | -1.0% | 90.7% | |
| Arden Partners ($ARDN) | -21.3% | -31.0% | 6.8% | 78.9% | |
| Impax Asset Management Group ($IPX) | | -3.1% | 6.8% | 55.2% | 100.9% |
| S & U ($46IE) | | -40.6% | 25.2% | 33.9% | 31.8% |
| |
|---|
| Median (33 companies) | -1.0% | 2.7% | 5.0% | 12.3% | 16.2% |
|---|
| Afh Financial Group ($AFHP) | | 39.5% | 15.0% | 39.4% | 50.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Record ($REC) | 99.6% | 99.3% | 99.0% | 98.8% | 98.7% |
| London Capital Group Hldgs ($LCG) | 73.6% | 67.9% | 84.2% | 86.4% | |
| Schroders ($SDRC) | 77.7% | 78.3% | 79.9% | 80.0% | |
| First Property Group ($FPO) | 67.9% | 83.0% | 80.6% | 78.6% | 76.3% |
| Walker Crips Group ($WCW) | 68.2% | 66.7% | 67.7% | 69.8% | 67.2% |
| |
|---|
| Median (13 companies) | 44.7% | 52.8% | 63.3% | 49.4% | 53.8% |
|---|
| Afh Financial Group ($AFHP) | 51.3% | 52.3% | 55.4% | 53.4% | 54.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Real Estate Credit Investments Pcc ($RECP) | 77.0% | 80.3% | 79.3% | 79.5% | 81.8% |
| Hargreaves Lansdown ($HL.) | 58.7% | 51.2% | 57.5% | 69.3% | 66.8% |
| Plus500 Ltd ($PLUS) | 63.5% | 48.2% | 46.0% | 59.3% | |
| First Property Group ($FPO) | 40.2% | 42.9% | 52.2% | 57.4% | 52.9% |
| Livermore Investments Group Ltd ($LIV) | 78.8% | 83.5% | 71.9% | 56.8% | |
| |
|---|
| Median (30 companies) | 16.8% | 18.3% | 18.5% | 22.8% | 24.0% |
|---|
| Afh Financial Group ($AFHP) | 8.8% | 12.5% | 14.3% | 16.4% | 20.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Daishin Securities Co ($DSS) | 15.0% | 6.5% | 15.1% | 11.2% | |
| First Property Group ($FPO) | 0.3% | 0.1% | 6.4% | 8.5% | 9.4% |
| Schroders ($SDRC) | 1.5% | 1.9% | 3.0% | 6.9% | |
| Leeds Group ($LDSG) | 0.6% | 0.9% | 11.5% | 5.6% | 1.0% |
| Record ($REC) | 0.1% | 0.6% | 0.1% | 3.8% | 1.0% |
| |
|---|
| Median (30 companies) | 0.8% | 0.8% | 0.8% | 1.0% | 1.0% |
|---|
| Afh Financial Group ($AFHP) | 0.7% | 3.8% | 1.8% | 0.8% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Plus500 Ltd ($PLUS) | 164.3% | 116.5% | 118.9% | 143.2% | |
| Fulcrum Utility Services Ld ($FCRM) | | | 347.2% | 103.4% | 29.9% |
| Hargreaves Lansdown ($HL.) | 101.0% | 87.5% | 90.0% | 93.3% | 82.4% |
| Guinness Peat Group ($GPG) | 10.0% | 13.7% | 23.8% | 28.8% | |
| Lighthouse Group ($LGT) | 8.6% | 14.6% | 25.7% | 26.6% | |
| |
|---|
| Median (35 companies) | 7.6% | 7.6% | 7.5% | 8.5% | 5.8% |
|---|
| Afh Financial Group ($AFHP) | 9.2% | 12.8% | 11.3% | 12.4% | 14.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Daishin Securities Co ($DSS) | 10.7x | 8.0x | 13.4x | 12.7x | |
| First Property Group ($FPO) | 5.6x | 12.3x | 9.4x | 7.6x | 7.7x |
| Leeds Group ($LDSG) | -0.5x | -0.3x | 1.4x | 2.6x | 2.5x |
| S & U ($46IE) | 1.7x | 3.1x | 0.5x | 1.8x | 3.2x |
| Guinness Peat Group ($GPG) | -2.1x | -1.6x | -0.4x | 1.2x | |
| |
|---|
| Median (26 companies) | -1.9x | -1.2x | -1.4x | -1.6x | -0.6x |
|---|
| Afh Financial Group ($AFHP) | -3.7x | -0.1x | -1.0x | -1.1x | -1.8x |
